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3 years ago

Why might a business conduct a life cycle assessment?

1 answer:

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Companies use LCA to demonstrate transparency and corporate credibility to stakeholders and customers. LCA is also used in new product research and development, when environmental footprint is important to the future marketing or cost structure of a product.

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Diseconomies of scale means that a company is too small to purchase in bulk and is unable to lower costs.

Vinvika [58]

Answer:

Diseconomies of scale are when production output increases with rising marginal costs. ... Fixed costs do not change with increases/decreases in units of production volume, while variable costs are solely dependent, which results in reduced profitability. They show how well a company utilizes its assets to produce profit.

Explanation:

It's true.

3 0

3 years ago

Read 2 more answers

Weston Inc. wants to outsource its customer service operations. The top managers of the company are preparing a plan exclusively

morpeh [17]

Answer:

Single use plan

Explanation:

A single use plan is employed in tackling a particular organisational situation. This plan is only used once, because it is used to solve a specific situation and then discarded when the situation has been tackled.

A single use plan is utilized in situations that is unlikely to be repeated in the nearest future since the main purpose of the plan is to solve a particular problem.

The single use plan can be very precise in handling a particular situation.

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4 years ago

Which of the following is false regarding residual income? Select one: a. It is similar to ROI in that it takes the size of the

Anton [14]

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4 years ago

Marketing, selling, distribution, and administrative expenses: A. can be traced through causal relationships to products. B.

lorasvet [3.4K]

Answer:

C) are independent of volume and product mix.

Explanation:

This is true because marketing, sales, distribution and administrative expenses are generally mixed costs. That means that they are part variable and part fixed.

For example, most salespeople's salary consists of a small fixed amount and a percent per total sales made.

Distribution costs also vary because generally when you purchase a truck, the largest cost is the truck itself, and the driver also gets paid on a monthly basis, insurance, etc., but other costs like fuel and maintenance costs vary depending on how much the trucks are driven, so they depend on the volume distributed.

Administrative expenses are also mostly fixed, but they might include bonuses for good performance which depend on total sales, and other expenses that might increase when total sales increase.

Finally marketing expenses are generally determined as a percentage of the expected sales revenue generated by the products. There are several ways to determine marketing expenses, but they all are based on a fixed amount (e.g. cost of producing an advertisement) and variable factors like market share or sales growth. E.g. you will advertise more intensively in the areas where your product sells better.

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4 years ago

Firms HL and LL are identical except for their leverage ratios and the interest rates they pay on debt. Each has $25 million in

erik [133]

Answer:

A. ROIC for firm LL 12%

ROIC for firm HL 12%

B. ROE for firm LL 13.5%

ROE for firm HL 18.6%

C. New ROE for firm LL 16.5%

Explanation:

A. Calculation to determine the return on invested capital (ROIC) for each firm

Using this formula

ROIC=EBIT(1-T)/Total Invested Capital

Let plug in the formula

ROIC=$5 million(1-.40)/$25 million

ROIC=$5 million*.60/$25 million

ROIC=$3 million/$25 million

ROIC=0.12*100

ROIC=12% for both firms

Therefore the return on invested capital (ROIC) for each firm is:

ROIC for firm LL is 12%

ROIC for firm HL is 12%

B. Calculation to determine the rate of return on equity (ROE) for each firm.

Calculation for ROE for firm LL

First step is to calculate the Debt

Debt=$25 million*20%

Debt=$5 million

Second step is to calculate the Debt Interest

Debt Interest=$5 million*10%

Debt Interest=$500,000

Third step is to calculate the EBIT of firm LL

EBIT of firm LL=$5 million- $500,000

EBIT of firm LL=$4,500,000

Fourth step is to calculate Tax owed

Tax owed =$4,500,000*40%

Tax owed =$1,800,000

Fifth step is to calculate the Net income of firm LL

Net income of firm LL=$4,500,000-$1,800,000

Net income of firm LL=$2,700,000

Sixth step is to calculate the Equity for firm LL

Equity for firm LL=$25million-$5 million

Equity for firm LL=$20 million

Now let calculate the ROE using this formula

ROE=Net income /Equity

Let plug in the formula

ROE=$2,700,000/$20 million*100

ROE=13.5%

Calculation for ROE for firm HL

First step is to calculate the Debt

Debt=$25 million*55%

Debt=$13,750,000

Second step is to calculate the EBIT of firm HL

EBIT of firm HL=$5 million-[(55%*$25 million)*11%]

EBIT of firm HL=$5 million-($13,750,000*11%)

EBIT of firm HL=$5 million-$1,512,500

EBIT of firm HL=$3,487,500

Third step is to calculate the Tax owed

Tax owed =$3,487,500*40%

Tax owed =$1,395,000

Fourth step is to calculate the Net income of firm HL

Net income of firm HL=$3,487,500-$1,395,000

Net income of firm HL=$2,092,500

Fifth step is to calculate the Equity for firm HL

Equity for firm HL=$25million- $13,750,000

Equity for firm HL=$11,250,000

Now let calculate the ROE using this formula

ROE=Net income /Equity

ROE=$2,092,500/$11,250,000*100

ROE=18.6%

Therefore the rate of return on equity (ROE) for each firm is:

ROE for firm LL is 13.5%

ROE for firm HL is 18.6%

C. Calculation to determine the new ROE for LL

First step is to calculate the debt

Debt=$25 million*60%

Debt=$15 million

Second step is to calculate the Debt Interest

Debt Interest=$15 million*15%

Debt Interest=$2,250,000

Third step is to calculate the EBIT of firm LL

EBIT of firm LL=$5 million- $2,250,000

EBIT of firm LL=$2,750,000

Fourth step is to calculate the Tax owed

Tax owed =$2,750,000*40%

Tax owed =$1,100,000

Fifth step is to calculate the Net income of firm LL

Net income of firm LL=$2,750,000-$1,100,000

Net income of firm LL=$1,650,000

Sixth step is to calculate the Equity for firm LL

Equity for firm LL=$25million-$15 million

Equity for firm LL=$10 million

Now let calculate the New ROE using this formula

ROE=Net income /Equity

Let Plug in the formula

ROE=$1,650,000/$10 million*100

ROE=16.5%

Therefore the new ROE for LL is 16.5%

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3 years ago