Ask question

Ask question

All categories

zhannawk [14.2K]

3 years ago

9

International Data Systems' information on revenue and costs is relevant only up to a sales volume of 121,000 units. After 121,0

00 units, the market becomes saturated and the price per unit falls from $10.00 to $6.80. Also, there are cost overruns at a production volume of over 121,000 units, and variable cost per unit goes up from $5.00 to $5.25. Fixed costs remain the same at $71,000.
Required:
a. Compute operating income at 121,000 units.
b. Compute operating income at 221,000 units.

1 answer:

laila [671]3 years ago

5 0

Answer:

a. $534,000

b. $271,550

Explanation:

a. Compute operating income at 121,000 units

Using this formula

Operating Income = (Price per unit - Variable cost per unit)*Units - Fixed costs

Let plug in the formula

Operating Income = ($10.00 - $5.00)*121,000 - $71,000

Operating Income = ($5.00)*121,000 - $71,000

Operating Income =$605,000-$71,000

Operating Income = $534,000

Therefore operating income at 121,000 units is $534,000

b. Compute operating income at 221,000 units

Using this formula

Operating Income = (Price per unit - Variable cost per unit)*Units - Fixed costs

Let plug in the formula

Operating Income = ($6.80 - $5.25)*221,000 - $71,000

Operating Income = $1.55*221,000-$71,000

Operating Income = $342,550-$71,000

Operating Income = $271,550

Therefore operating income at 121,000 units at 221,000 units is $271,550

You might be interested in

Advantages of road transport over rail transport

Blizzard [7]

Answer:

road transport offer door to door service while rail transport can't offer

8 0

3 years ago

Consider a process restringing tennis rackets. The process starts with a unit cost of $10 for the first unit—that is, c(1) = 10—

geniusboy [140]

Answer:

The correct answer is $5.83.

Explanation:

According to the scenario, the given data are as follows:

Cost for 1st unit (C1) = $10

Learning rate (LR) = 0.9

So, we can find the unit cost for 35th unit by using logarithmic approach as follows:

$C_{N}$ = $C_{1} N^{b}$

Where, $C_{N}$ = C is for cost and N is for number of unit

$C_{1}$ = Cost of 1st unit

$N^{b}$ = N is for number of unit and b is for slope of learning curve.

So, b = (Log of the learning rate) / (Log 2)

So, by putting the value, we get

$C_{35}$ = $10 × $35^{\frac{Log 0.9}{log 2} }$

= $10 × 0.583

= $5.83

Hence, the unit cost for the 35th unit will be $5.83.

4 0

3 years ago

Which of the following statements represent the appropriate directional relationships between the concepts of inherent risk, con

luda_lava [24]

Answer:

b. As inherent risk goes up, audit risk goes down.

Explanation:

Inherent risk is the risk which is present before applying any control, and audit risk is the that the auditor expresses inappropiate audit opinion when the financial statements are materialy misstated.

Thus, when the inherent risk is <em>high</em>, the auditor keeps the audit risk at <em>low </em>level to perform more subtantative procedures.

8 0

3 years ago

Thailand has a comparative advantage in rice and an absolute advantage in cell phones Indonesia has a comparative advantage in c

Aleonysh [2.5K]

Answer:

d. Thailand should export rice and import cell phones

Explanation:

Analyzing the question, it is correct to say that Thailand should export rice and import cell phones.

To understand why this statement is correct, we need to understand the concept of comparative advantage and absolute advantage.

The comparative advantage occurs when a country has great efficiency in producing a certain good, that is, the production is specialized and therefore advantageous in relation to another country. So it is correct to say that Thailand, having a comparative advantage in rice, should export rice to achieve greater economic advantage.

The absolute advantage, on the other hand, corresponds to the production of a good with lower costs than another country, but Thailand should import cell phones because Indonesia has a comparative advantage in cell phones, which makes it more competitive than Thailand in this segment.

3 0

2 years ago

What are the impact of SMEDAN on entrepreneurship

daser333 [38]

You can easily apply for loans and support funds both within and outside the country. It also grants you access to funding from the government and private sector.

6 0

2 years ago