The original data is :
Data for Hermann Corporation
Per unit Percent of sales
Selling price $ 75 100%
Variable expenses 51 68
Contribution margin $ 24 32%
The fixed expenses are $ 75,000 per month and the company is selling 4000 units per month.
Solution :
Present Proposed
Sales 300000 375000
Less : Variable cost 204000 275000
Contribution margin 96000 100000
Less : Fixed expenses <u> 75000 </u> <u> 75000 </u>
Net income 21000 25000
The net operating income : Increases 4000
Net operating income = increased sales Net income - current sales net income.
Therefore the higher quality component should be used.
Answer:
-The lessee reports a single amount of lease expense, which is equal to interest expense plus amortization expense, in its income statement.
-The lessor reports a single amount of lease revenue, which is equal to interest revenue plus amortization revenue, in its income statement.
-The lessee reports lease expense on a straight-line basis and the lessor reports lease revenue on a straight-line basis over the lease term.
Explanation:
The mode of reporting in an operating lease is slightly different from that in a finance lease. For example, the lessor can use a straight-line form of reporting he revenue while the lessee can use a straight-line form of reporting the expense for the given term of the lease. The lessee and lessor usually report expense and revenue respectively.
Answer:
The answer is b. make-to-stock system
Explanation:
Make-to-stock system is a build-ahead production approach in which production plans may be based upon sales forecasts and/or historical demand. It is a traditional production strategy that is used by businesses to match the inventory with anticipated consumer demand.
Answer:
The elasticity is about 1.43, and an increase in the price will cause hotels' total revenue to decrease
Explanation:
The formula of the midpoint for the variation of the quantity is 
and for the price is 
. With the variation of the price and the quantity the elasticity formula is ΔQ/ΔP. Replacing the elasticity is -1.43
The price elasticity of the demand is bigger than 1, that means that the demand is elastic, every increase of the price will cause a bigger decrease of the quantity, the revenue will drop because the increase of the price do not compansete the decrease of the quantity.
Answer:
Option C is correct one.
Interest expense 773
Discount on bonds payable 73
Cash 700
Explanation:
2016 interest expense = initial issue price, which is the 1/1/2014 book value x the market (effective) interest rate
= $9,668 x 08
= $773
Cash interest payment
= maturity value of the bond x the stated interest rate = $10,000 x .07
= $700
Amortization of discount on bonds payable
= interest expense - interest cash payment
= $773 - $700.
= $73
