Which of the following statements concerning product costs versus general, selling, and administrative costs is false?

Consider a firm with an EBIT of $559,000. The firm finances its assets with $1,090,000 debt (costing 6.4 percent) and 209,000 sh

Stells [14]

Answer:

EPS before change in capital structure = $2.34

EPS after change in capital structure $3.45

Difference in EPS caused by the change ($1.11)

Explanation:

a) Data and Calculations:

EBIT = $559,000

6.4% Debts = $1,090,000

Common stock = 209,000 shares at $15 per share

EPS before increasing debt:

EBIT = $559,000

Interest (69,760) (6.4% of $1,090,000)

Net income = $489,240

EPS = $489,240/209,000 = $2.34 per share

EPS after increasing debt:

New debt = $1,990,000 ($1,090,000 + $900,000)

New equity shares = 125,000 shares (209,000 - 84,000)

EBIT = $559,000

Interest (127,360) (6.4% of $1,990,000)

Net income = $431,640

EPS = $431,640/125,000 = $3.45 per share

EPS before change in capital structure = $2.34

EPS after change in capital structure $3.45

Difference in EPS caused by the change ($1.11)

3 0

3 years ago

Material is a scarce resource. The product uses four pounds of material. How much would the company be willing to pay for one mo

miss Akunina [59]

The amount that the company is willing to pay is $12.50.

<h3>What is CM per pounds?</h3>

CM per pounds means the Contribution margin per pounds that we will calculate below.

Particulars Amount

Selling price $125

Less: Variable cost

Material $40

Labor $22.5

Variable cost $12.5

CM per unit $50

Divide: Pounds used $4

CM per pound $12.5

In conclusion, the amount that the company is willing to pay is $12.50.

Read more about Contribution margin

brainly.com/question/15684424

7 0

3 years ago

the main objective of _____ is to avoid problems or to identify them as soon as possible.

Nezavi [6.7K]

The main objective of quality assurance is to avoid problems or to identify them as soon as possible. Quality assurance is making sure that a product or service maintains a set level of faulty. If more attention needs to be put on the processes to make sure that the quality stays, that's okay, but it needs to be maintained. QA is a shortened version of quality assurance and many company's have a QA team set in place so that mistakes and defects are prevented.

7 0

3 years ago

After the computers dns cache is cleared, where will it most likely look to resolve the domain name the next time you enter ceng

SpyIntel [72]

After the computers dns cache is cleared, where it will most likely look to resolve the domain name the next time you enter cengage.com in your browse to The ISP's DNS server.

An ISP which stands for internet service provider is a company that plays a key role in providing individuals and organizations the access to the internet and other related services like browser.

The Domain Name System or the DNS is a term that is used for the hierarchical naming system which is used to identify computers through the Internet. Especially through the help of an IP address in short.

To learn more about domain here

brainly.com/question/13718390

#SPJ4

3 0

2 years ago

BE18.12 (LO 2, 3) Manual Company sells goods to Nolan Company during 2020. It offers Nolan the following rebates based on total

Lostsunrise [7]

Answer:

$103,400

Explanation:

Does Manuel have any certainties that Nolan will purchase more than 30,000 units during the year? Apparently, according to historic sales, Nolan purchases at least 40,000 units per year, so Manuel should consider that Nolan will again purchase a similar amount this year and therefore, will be entitled to a rebate.

Another issue that must be considered is that 30,000 units / 4 quarters = 7,500 units per quarter, and Nolan clearly purchased more than that.

A rebate is not a discount, it happens when the seller offers a certain amount of goods to a buyer without cost because the buyer purchased more than an specific amount. It is basically an incentive or prize that Manuel gives Nolan for being a good client.

Manuel should recognize $110,000 x (1 - 6%) = $103,400 in revenues

6 0

3 years ago