Answer:
$50,000
Explanation:
The computation of the interest expense for deduction is shown below:
= Interest on a mortgage on his home + Interest on a mortgage on his vacation home
= $40,000 + $10,000
= $50,000
All other information which is given in the question is not relevant for the computation part. Hence, ignored it
We simply add both types of interest related to a mortgage on the home
Federal Open Market Committee
Year Annual cost PV factor at 12% Present value
1 $1,800,000 0.893 $1.607,400
2 $1,800,000 0.797 $1,434,600
3 $1,800,000 0.712 $1,281,600
4 $1,800,000 0.636 $1,144,800
5 $1,770,000 0.567 $1,003,590
6 $1,740,000 0.507 $882,180
7 $1,710,000 0.452 $772,920
8 $1,680,000 0.404 $678,720
9 $1,650,000 0.361 $595,650
10 $1,620,000 0.322 $521,640
Present worth $9,923,100
Answer:
If the company decides to increase its advertising budget, its net profits will decrease by $200 (= $56,800 - $57,000).
Explanation:
The company is currently selling 5,000 units per month at $150 per unit, and its total variable costs are $90 per unit.
Fixed expenses are $243,000 per month.
Current income statement:
sales revenue = $750,000
minus variable costs = ($450,000)
<u>minus fixed costs = ($243,000) </u>
net income = $57,000
If the company increases its advertising budget be $11,000 it should sell 180 more units per month, the new income statement would be:
sales revenue = $777,000
minus variable costs = ($466,200)
<u>minus fixed costs = ($254,000) </u>
net income = $56,800
If the company decides to increase its advertising budget, its net profits will decrease by $200 (= $56,800 - $57,000).
The blank space has been correctly filled below:
- The contribution margin income statement allows users to easily judge the impact of a change in <u>selling price, cost, or volume</u> on profit.
The contribution margin income statement is an evaluation of a former sales period. Entrepreneurs use this procedure to determine whether they made a profit or loss during the period.
After their evaluation, they realize the operating income or net income. The contribution margin is generated using this formula,
Net product revenue - Total variable cost ÷ product revenue.
A proper understanding of the fixed and variable costs is essential to accurately calculate the contribution margin.
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