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Anastasy [175]
3 years ago
14

last year, cayman corporation had sales of $26 million, total variable costs of $15 million, and total fixed costs of $5,000,000

. in addition, they paid $4 million in interest to bondholders. cayman has a marginal tax rate of 21 percent. if cayman's sales increase by 15%, what should be the increase in operating income
Business
1 answer:
Fofino [41]3 years ago
6 0

Answer:

Cayman Corporation

The increase in operating income is 27.5% (or $1.65 million).

Explanation:

a) Data and Calculations:

Sales last year =       $26 million

Total variable costs     15 million

Contribution margin  $11 million

Fixed costs                   5 million

Operating income     $6 million

Bondholders' interest 4 million

Income before tax    $2 million

Income taxes (21%)    0.42 million

Net income              $1.58 million

                                    Last Year   Increase by 15%

Sales revenue =       $26 million     $29.9 million

Total variable costs     15 million        17.25 million

Contribution margin  $11 million     $12.65 million

Fixed costs                   5 million         5.0 million

Operating income     $6 million       $7.65 million    $1.65 m or 0.275

Bondholders' interest 4 million         4.0 million

Income before tax    $2 million         3.65 million

Income taxes (21%)    0.42 million    0.7665 million

Net income              $1.58 million     2.8835 million = 82.5%

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Explanation:

The computation is shown below:

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1                   $125,000                    $1,075,000

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3                  $125,000                    $825,000

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5                  $125,000                    $575,000

6                  $125,000                    $450,000

7                  $125,000                     $325,000

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The depreciation expense is

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3 years ago
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Answer:

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The company benefits from usage of stream to the tune of $4,000 a year.  In such scenario, if company compensates the fishermen for any amount between $8,000 and $40,000 then, in that case, optimal solution to the problem can be achieved in absence of any other transaction cost as per the Coase Theorem.

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Answer:

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Diluted Earnings per share shows the<em> future position</em> of the Earnings per shareholders once the potential shareholders begin exercising their rights.

Potential Shareholders exists due to Financial Instruments that <em>might be converted into ordinary shares</em>. Examples are Convertible Bonds, Options, Convertible Preference shares.

<em>Step 1 Calculate Basic Earnings Per Share</em>

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<em>Step 2 Calculate Diluted Earnings Per Share</em>

Diluted Earnings Per Share = Adjasted Basic Earnings per Share Earnings/ Adjasted  Number of Ordinary Shares

<em></em>

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Profits attributable to Ordinary Shareholders                           $ 3960

Add Savings on Interest (60×$1,000×8%×80%)                        $3,840

<em>Adjusted Basic Earnings per Share Earnings                          $7,800</em>

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Add 60× 100 shares of Convertible Bonds                                6,000 shares

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The opening or introduction of your presentation is the ideal time to introduce the hypothesis. The tentative solutions are important about the presentation.

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In the context of science, a hypothesis is an assertion based on current knowledge that is appropriate for describing a particular phenomenon but whose validity has not been established or has not been independently tested.

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7 0
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