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oksian1 [2.3K]
3 years ago
11

Last month when Holiday Creations, Inc., sold 41,000 units, total sales were $282,000, total variable expenses were $214,320, an

d fixed expenses were $36,900. 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 $1,700? (Do not round intermediate calculations.)
Business
1 answer:
s344n2d4d5 [400]3 years ago
6 0

Answer:

1. Company’s contribution margin (CM) ratio = 24%

2. Estimated change in the company’s net operating income = $408

Explanation:

1. What is the company’s contribution margin (CM) ratio?

Contribution margin (CM) =  Total sales - Total variable expenses = $282,000 - $214,320 = $67,680

Contribution margin (CM) ratio = Contribution margin / Total sales = $67,680 / $282,000 = 0.24, or 24%

2. What is the estimated change in the company’s net operating income if it can increase total sales by $1,700? (Do not round intermediate calculations.)

Estimated change in the company’s net operating income =  Increase total in sales * Contribution margin (CM) ratio = $1.700 * 24% = $408

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Described below are certain transactions of Pina Corporation. The company uses the periodic inventory system. 1. On February 2,
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Answer:

Question: From the details given, make all the journal entries necessary to record the transactions above using appropriate dates.

                                  Pina Corporation

                                   Journal Entries

Date                          Details                                    Debit               Credit

                                                                                    $                       $

February 2              Purchases                               62,034

                               Accounts Payable                                            62,034

Being credit purchase of goods at discount of 2%

February 26           Accounts Payable                   62,034

                               Purchase - Discount                  1,266

                               Cash                                                                 63,300  

Being payment made for goods purchased

April 1                      Vehicle                                      52,000

                                Cash                                                                   3,000

                                10% 1-year Note payable                                49,000

Being purchase of vehicle by part cash, part note-payable

May 1                       Cash                                            82,900

                                Note Payable - Discount             9,600

                                1-year Note payable                                         92,500

Being borrowing from bank

August 1                   Dividend                                     280,000

                                 Dividend Payable                                            280,000

Being dividend declared, not yet paid

September 10           Dividend Payable                      280,000

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Being cash payment of dividend

Explanation:

a) 2/10, n/30 means that the buyer is to pay within 30 days but is entitled to 2% discount if the purchase is paid for in 10 days. Since Pina records at net amounts after cash discount

To record this purchase = 63,300 * 0.02 = 1,266

                                        = 63,300 - 1266 = $62,034

b) Since payment was made on 26th, it means the 10 day discount was not utilized hence Pina pays full price for the goods

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Refer to Landfall Service. Because the company is known for its ability to produce lawn furniture more efficiently than any othe
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The company must have absolute advantage.

Having been in business for a while, Landfall Service is a provider of outdoor furniture. Greater than any other company in the country, it is renowned for its capacity to make furniture quickly. The truth is that no rival businesses exist in any other country. Many of the items offered by Landfall Service have been exported. Actually, sales outside of the United States account for 80% of company income. In order to support domestic businesses, the Italian government has slapped a tax on imported furniture. On the other hand, because the government wanted a piece of the action, the Brazilian government levied taxes on Landfall Service items.

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Suppose that a borrower and a lender agree on the nominal interest rate to be paid on a loan. Then inflation turns out to be low
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Answer:

1) False

when the inflation is lower than expected, the real interest rate will be higher, since

real interest rate = Nominal interest rate - inflation.

2) Gains

In case of unexpected lower inflation the lender gains and the borrower loses.This is because real value of the loan increases due to lower inflation.

3) Loses

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3 years ago
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Suppose you deposited $5,000 in a bank account that pays 5.25% with daily compounding based on a 360-day year. How much would be
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Answer:

$5,175

Explanation:

The computation of the amount after 8 month is as follows

As we know that

Amount = Principal × (1 + interest rate × number of days ÷ total number of days)

where,

Principal = $5,000

Interest rate = 5.25%

Number of days = 30 days × 8 months = 240 days

And, the total number of days = 360 days

So, the amount after 8 months is

= $5,000 × (1 + 5.25% × 240 days ÷ 360 days)

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3 years ago
If a firm decide to eliminate a product line that produce a yearly net lo of $21000 it yearly net income
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Option A is the proper response. It will only increase by $21,000 if it can completely eliminate all of the fixed expenses related to that product line.

Net income, in both business and accounting, is an entity's revenue fewer costs, depreciation and amortization, interest, and taxes for a given accounting period.

All fixed expenses related to a discontinued product line should also be discontinued. then the corporation can add $21,000 to its overall net profits. When a product line is discontinued, variable expenses are automatically eliminated.

The correct response is A. only if it can eliminate all of the fixed costs related to that product line will it increase by $21,000.

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<u>COMPLETE QUESTION:</u>

If a firm decides to eliminate a product line that produces a yearly net loss of $21,000, its yearly net income

A. will increase by $21,000 only if it can eliminate all of the fixed costs associated with that product line.

B. will increase by $21,000 only if it can eliminate all of the variable costs associated with that product line.

C. will automatically increase by $21,000.

D. will decrease unless the firm can eliminate all of the fixed costs associated with that product line.

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