Operating costs that do not increase or decrease with changes in production are called _________

A group of venture investors is considering putting money into Lemma Books, which wants to produce a new reader for electronic b

larisa [96]

Answer:

3400 units

Explanation:

Profit is the difference between the sales revenue and the total costs. It is calculated as:

Sales Revenue - Total Costs

Total costs include both fixed costs and variable costs. Fixed costs do not change with the level of output whereas variable costs do change with the level of output. However, as more units get produced, the total fixed cost per unit does change as they get spread over a larger unit of output.

In order to calculate the minimum quantity, we can make use of the break-even point. This is the point at which the business makes neither profits nor losses and the TR is equal to TC. At this point, all fixed costs have been covered and any additional unit sold provides a profit of the amount Selling price per unit - Variable cost per unit (contribution margin). The break-even point is calculated as:

Fixed costs / (Sales price per unit - Variable cost per unit)

350000 / (500 - 250) = 1,400 units to cover all costs.

After this point, the profit per unit would be selling price - variable cost per unit i.e. $250. Hence, to obtain $500,000 operating income or profit, it has to sell $500000 / 250 = $2000 units after breaking even.

Hence, total number of units to sell to make $500,000 operating profit = 2000 units + 1400 units = 3400 units

This can be checked as follows:

Sales - [(VC x Q) + FC] = Profit

(3400 x $500) - [(3400 x $250) + 350000] = Operating Income

Operating Income = $1,700,000 - $1,200,000

Operating Income = $500,000

5 0

3 years ago

Sourcing goods and services from locations around the globe is known as __________.

faltersainse [42]

Answer:

Global Sourcing

Explanation:

Global sourcing is the practice of sourcing from the global market for goods and services across geopolitical boundaries.

5 0

3 years ago

The market value of Fords' equity, preferred stock, and debt are $ 7 billion, $ 2 billion, and $ 15 billion, respectively.

Stolb23 [73]

Answer:

Ford's weighted average cost of capital is 8.22 %

Explanation:

Weighted Average Cost of Capital (WACC) is the minimum return that the company expect from a project. It shows the risk of the company.

Calculation of WACC

WACC = Cost of equity + Cost of preferred stock + Cost of debt

Capital Source Market Values Weight Cost Total Cost

equity $ 7 billion 29.17% 13.6% 3.97 %

preferred stock $ 2 billion 8.33% 12% 1.00 %

debt $ 15 billion 62.50% 5.2 % 3.25%

Total $ 24 billion 8.22 %

Cost of equity = Risk free rate + Beta × Risk Premium

= 4% + 1.2 × 8%

= 13.6%

Cost of preferred stock = Dividend/Market Price

= $ 3/ $ 25 × 100

= 12%

Cost of debt = interest × (1- tax rate)

= 8% × (1-0.35)

= 5.2 %

7 0

3 years ago

Stanley has held the same job for several years, and though he has had quite a bit of success and makes a very good salary, he h

olasank [31]

Answer:

Deceleration stage

Explanation:

Stanley has held the same job for several years, and though he has had quite a bit of success and makes a very good salary, he has begun to disengage from his work. He is less emotionally involved, and feels like he should start thinking about retirement. According to the career development theory, Stanley is in the deceleration stage.

8 0

3 years ago

he 2021 income statement of Adrian Express reports sales of $16,281,000, cost of goods sold of $9,851,500, and net income of $1,

Aleksandr-060686 [28]

Answer:

ADRIAN EXPRESS

1. Average Collection Period = 365/Average Receivable Turnover Ratio

= 365/13.4

= 27.2 days

2. Average days in inventory = Average Inventory/Cost of goods sold * 365

= $1,615,000/$9,851,500 * 365

= 59.8 days

3. Current Ratio = Current Assets/Current Liabilities

= $3,850,000/$2,010,000

= 1.9 to 1

4. Debt to Equity Ratio = Total Debts/Equity

= $4,320,000/$4,340,000 * 100

= 99.5%

Explanation:

a) Data and Calculations:

ADRIAN EXPRESS

Income Statement for the year ended December 31, 2021:

Sales = $16,281,000

Cost of goods sold = $9,851,500

Net Income = $1,610,000

ADRIAN EXPRESS

Balance Sheets December 31, 2021 and 2020

2021 2020

Assets

Current assets:

Cash $ 610,000 $ 770,000

Accounts receivable 1,420,000 1,010,000

Inventory 1,820,000 1,410,000

Long-term assets 4,810,000 4,250,000

Total assets $ 8,660,000 $ 7,440,000

Liabilities and Stockholders' Equity

Current liabilities $ 2,010,000 $ 1,670,000

Long-term liabilities 2,310,000 2,410,000

Common stock 1,990,000 1,990,000

Retained earnings 2,350,000 1,370,000

Total liabilities and stockholders' equity $ 8,660,000 $ 7,440,000

Industry averages for the following four risk ratios are as follows:

Average collection period 25 days

Average days in inventory 60 days

Current ratio 2 to 1

Debt to equity ratio 50%

Average accounts receivable = ($1,420,000 + 1,010,000)/2 = $1,215,000

Average Receivable Turnover Ratio = Net Sales/Average Receivable

= $16,281,000/$1,215,000 = 13.4

Average Collection Period = 365/Average Receivable Turnover Ratio

= 365/13.4

= 27.2 days

Average Inventory = ($1,820,000 + 1,410,000)/2 = $1,615,000

Average days in inventory = Average Inventory/Cost of goods sold * 365

= $1,615,000/$9,851,500 * 365

= 59.8 days

Current Assets = Total assets - Long-term assets

= $8,660,000 - $4,810,000

= $3,850,000

Current Ratio = Current Assets/Current Liabilities

= $3,850,000/$2,010,000

= 1.9 to 1

Total debts = current liabilities + long-term liabilities

= $2,010,000 + $2,310 = $4,320,000

Total Equity = Common Stock + Retained Earnings

= $1,990,000 + $2,350,000 = $4,340,000

Debt to Equity Ratio = Total Debts/Equity

= $4,320,000/$4,340,000 * 100

= 99.5%

6 0

3 years ago

Operating costs that do not increase or decrease with changes in production are called __________ expenses.