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navik [9.2K]
3 years ago
11

Alternative Production Procedures and Operating Leverage Assume Sharpie, a brand of Newell Brands, is planning to introduce a ne

w executive pen that can be manufactured using either a capital-intensive method or a labor-intensive method. The predicted manufacturing costs for each method are as follows: Capital Intensive Labor Intensive Direct materials per unit $ 10.00 $ 12.00 Direct labor per unit $ 4.00 $ 12.00 Variable manufacturing overhead per unit $ 5.00 $ 2.00 Fixed manufacturing overhead per year $ 1,800,000 $ 500,000 Sharpies market research department has recommended an introductory unit sales price of $100. The incremental selling costs are predicted to be $250,000 per year, plus $4 per unit sold. (a) Determine the annual break-even point in units if Sharpie uses the: Note: Round both answers UP to the nearest whole number.
Business
1 answer:
aleksandr82 [10.1K]3 years ago
5 0

Answer:

For Capital Incentive manufacturing method = 26,623 Units

For Labor Incentive manufacturing method = 10,714 Units

Explanation:

We are asked to find out the annual break - even point in units if Sharpie uses the Capital Intensive Method and Labour intensive Method.

Solution:

1. For Capital Intensive Method:

Direct Materials = 10

Direct Labor  = 4

Variable MOH  = 5

Variable Selling =  4

Total Variable Cost = T = 23  

Selling Price = P = 100

Contribution Margin = M = P-T = 77

Fixed Overhead:

Fixed MOH = 1800000

Fixed Selling costs = 250000

Total Fixed Costs  = 2050000

Break Even Point in Units = Total Fixed Cost / M  = 26623

2. For Labor Intensive Method:

Direct Materials = 12

Direct Labor  = 12

Variable MOH  = 2

Variable Selling =  4

Total Variable Cost = T = 30

Selling Price = P = 100

Contribution Margin = M = P-T = 70

Fixed Overhead:

Fixed MOH = 500000

Fixed Selling costs = 250000

Total Fixed Costs  = 750000

Break Even Point in Units = Total Fixed Cost / M  = 10714

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The common stock of Buildwell Conservation & Construction Inc. (BCCI) has a beta of .9. The Treasury bill rate is 4%, and th
UkoKoshka [18]

Answer:

Cost of equity is 11.2%

WACC is 8.74%

Explanation:

The formula for cost of equity is given below:

Cost of equity=risk free rate+(Beta *risk premium)

risk free rate is the treasury bill rate of 4%

Beta is 0.9

market risk premium is 8%

cost of equity=4%+(0.9*8%)=11.2%

WACC=Ke*E/V+Kd*D/V*(1-t)

Ke is the cost of equity of 11.2%

Kd is the cost of debt of 5%

t is the tax rate of 40% or 0.4

E is the equity weighting of 70% or 0.7

D is the debt weighting of 30% or 0.3

V is the E+D=0.7+0.3=1

WACC=11.20% *0.7/1+(5%*0.3/1*(1-0.4)

WACC=7.84% +0.90% =8.74%

       

4 0
3 years ago
________ describes the net present value of the stream of future profits expected over the customer's lifetime purchases.
Readme [11.4K]

Customer lifetime value basically describes the net present value of the stream of future profits expected over the customer's lifetime purchases.

<h3>What is Customer lifetime value?</h3>

Customer lifetime value can likewise be characterized as the financial value of a customer relationship, in light of the current value of the extended future incomes from the customer relationship.

The motivation behind the customer lifetime value metric is to evaluate the monetary value of every customer. Wear Peppers and Martha Rogers are cited as saying, "a few customers are more equivalent than others."

Customer lifetime value varies from customer benefit or CP (the contrast between the incomes and the expenses related with the customer relationship during a predetermined period) in that CP estimates the past.

Therefore it is the Customer lifetime value which denotes the net value for future profits.

Learn more about Customer lifetime values here:

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5 0
2 years ago
A new labor-saving technology will likely result in..... Group of answer choices Lower wage share of output and lower Gini coeff
jekas [21]

Answer:

Higher unemployment, lower wage share of output, and higher Gini coefficient in the long run.

Explanation:

Since less labor will be used, total unemployment will increase. Besides less labor being used, more capital will be used, so the share of labor in total output will decrease. Labor efficiency increases, since you need less labor to produce the same or even a larger amount of output.

New technologies tend to increase the wages of high skilled labor and management. Since the Gini coefficient measures income inequality, then higher wages for a few will increase inequality.  

This is an example of what is happening in the US, where highly trained labor is getting paid better every time while unskilled labor is getting paid the same as many years ago or their wage has even decreased with time. This shows how important a college education is, and the difference will only keep increasing.

7 0
3 years ago
Allen, inc., has a total debt ratio of .34. what is its debt-equity ratio
lawyer [7]
Total debt ratio is the ratio of total debt to total assets 
i.e 
Total debt ratio = Total debt / Total assets  
But Total assets is nothing but total equity plus total debt  
Now let us consider, 
TD = Total debt  
TE = Total equity 
TA= Total assets   
Therefore, 
Total debt ratio = TD/TA 
But as mentioned above 
TA = TD + TE  
total debt ratio = Total debt/(total debt+total equity) 
total debt ratio = .34(given) 
.34 = TD / (TD + TE)  
Solving this equation yields:  
0.34 = 1/(1+ TE/TD) 
0.34(1+TE/TD) = 1 
0.34 + 0.34TE/TD =1 
.34(TE/TD) = 1 - 0.34 
0.34 (TE/TD) = 0.66 
0.34TE = 0.66TD  
Now, Debt equity ratio is the ratio of Total debt to total equity  
Debt-equity ratio = TD / TE 
Debt-equity ratio = 0.34 / 0.66 
Debt-equity ratio = 0.51515152
6 0
3 years ago
What happens if you perm your hair after washing it?
natali 33 [55]
Its almost the same except your heir will be cleaner and fresher. somethimes it depends on your hair type and texture.
5 0
3 years ago
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