Answer:
$12
Explanation:
Contribution margin is the net of sale amount and variable cost. It is the amount of return available to recover the fixed cost and make profit from after that for the business.
Selling price = $30
Only Variable manufacturing cost and Selling commission is consider as variable costs for the calculation of contribution margin because $4 per unit administrative cost is calculated on the current level of activities, it will not remains the same.
Variable manufacturing cost = $15
Selling commission = $30 x 10% = $3 per unit
Total Variable cost = $15 + $3 = $18
Contribution margin per unit = Selling price - Variable costs = $30 - $18 = $12
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Hello! the answer to your question is D. Net income is the accounting profit from the operations of the company during the period.
Answer:
Beta = 2
New required rate of return = 16.50%
Explanation:
In this question, we apply the Capital Asset Pricing Model (CAPM) formula which is shown below
Expected rate of return = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)
12.50% = 3% + Beta × 4.75%
12.50% - 3% = Beta × 4.75%
So, the beta would be 2
The (Market rate of return - Risk-free rate of return) is also known as the market risk premium
Now the required rate of return would be
= 3% + 2 × 6.75%
= 3% + 13.50%
= 16.50%
A manufacturer would need to find the production quantity where the marginal rate of return equals marginal costs (this is called the equilibrium point). This would be the point where profits are maximized.
