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atroni [7]
3 years ago
8

A company's income before interest expense and income taxes is $575,000 and its interest expense is $145,000. Its times interest

earned ratio is:__________.a. 0.25 b. 2.73 c. 0.99 d. 3.72
Business
1 answer:
34kurt3 years ago
4 0

Answer:

3.96

Explanation:

A company's Time Interest Earned ratio shows us its ability to pay its debts.

The income before expenses is given as: $575000

The interest expenses = $145000

The question wants us to find time interest earned ratio. We get this by:

Company's initial income/interest expenses

= $575,000/$145,000

= 3.96

This is the correct answer to the question. The right answer was not listed in the options.

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Court Inc. produces two types of products - Gizmos and Gadgets. The following information is available related to each product:
anyanavicka [17]

Answer: 1250

Explanation:

Let's go in stages,

Gizmos are sold for $80 and have a variable cost of $36. Subtracting that would give us $44. This is the Contribution margin of Gizmos.

Gadgets are sold for $50 and have a variable cost of $22. Subtracting that would give us $28. This is the Contribution margin of Gadgets.

The text says that 3/4 of goods sold are Gizmos with the rest being gadgets.

Let's account for that using their contribution margins.

This means that Gizmos contribute 3/4 from their CM which we'll calculate as,

= 3/4 * 44

= 33

Gadgets would be

= 1/4 * 28

= 7

The Weighted Average contribution margin for both goods in their selling proportion is therefore,

= 33 + 7

= $40

If they make $40 as the weighted average CM then to find the amount of units needed to break even with a fixed cost of $50,000 can be calculated by dividing the fixed costs by the Weighted Average CM which would be,

= 50,000/40

= 1250

They would need to sell 1250 total units in order to break even with a product mix of 3/4 Gizmos and 1/4 Gadgets.

Please do react or comment if you need any clarification. Thank you.

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3 years ago
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