Answer:
The Company will use the 64 unit cost for the make scenario
and use the 54 for the buy plus the fixed cost (6x 2000)
In the short term, when the fixed cost are unavoidable, the operating profit will increase to 6,000
in the long-term, the operating profit will increase to 18,000
Explanation:
Direct Materials 27
Direct Labor 16
Variable Overhead 14
Fixed Overhead 6
Total unit cost 63
Total Variable Cost 57
Offered Unit cost
108,000/2,000 = 54
Unit Cost $63.00 $54.00 $9.00
Total Cost $126,000.00 $108,000.00 $18,000.00
Unavoidable Fixed Cost $12,000.00 -$12,000.00
Total Cost $126,000.00 $120,000.00 $6,000.00
Answer with Explanation:
<h2><u>Requirement 1:</u></h2>
Modigliani & Miller's theorem helps understanding the value of the company, the factors that results in change in the value of the company and the financial risk that increases the firm's Weighted Average Cost of Capital.
M & M proposition 1:
The M & M proposition 1 (or M & M without Tax model) says that the value of the firm remains the same no matter what is the percentage of debt and equity in the capital structure hence the primary focus of the management must be to decrease cost and increase the return on the investment.
M & M proposition 2:
However later, due to increased critism of not considering the tax implications on the WACC, M & M presented a modified model which is also known as M & M With Tax Model. In it he acknowledges the importance of tax in calculating the WACC and he is of the opinion that the injection of the debt reduces the WACC. Hence the maximum level of debt must be used to exploit all the available investment opportunities.
The value of the company can be calculated using the following formula:
Value of the Company = Free Cash flow * (1 + g) / (WACC - g)
The changes in the capital structure results in changes to firm's WACC which changes the value of the company. This clearly shows that if the WACC can be reduced then the value of the firm would increased. Hence M & M model is useful in predicting the Optimal Capital structure that would give lowest WACC and thus highest value of the company.
<h2><u>Requirement 2:</u></h2>
The basic assumptions of M & M proposition without tax Model are as under:
- There are no transaction costs on trading of securities
- There are no taxes.
- The market is perfect market which means that the investor and the corporation have same information which doesn't impacts the decision making of both entities.
- The Floatation costs are zero which means that their are no issuance costs, listing expenses, etc.
- The taxes on the Dividend distribution are also zero.
The basic assumptions of M & M proposition with tax Model are as under:
- There are no transaction costs on trading of securities
- The capital market is perfect market which means that the investor and the corporation have same information which doesn't impacts the decision making of both entities.
- The Floatation costs are zero which means that their are no issuance costs, listing expenses, etc.
The fee-per-bag waste collection systems charge consumers for the amount of waste they throw away.
A volume-based waste tax aims to promote behavioral change in waste generation and create incentives to reduce overall waste disposal. Based on the experiences of other large cities, volume-related waste accounting is an effective tool for waste reduction.
Waste generation was calculated as the sum of diverted and discarded waste (in tons). The amount of waste generated per capita was calculated by dividing the amount of waste generated by the population.
To calculate the waste reduction rate, we first need to find two variables. It's the amount of resources you've used in a given period of time and the resources wasted from the previous period. Then divide the first variable by her second variable and multiply the result by 100 to get the percentage.
Learn more about waste here: brainly.com/question/3709775
#SPJ4
The other pervasive institutional consideration which may influence pay inequality include: technological advancement, globalization, wage-setting institutional changes. In a persuasive speech, the discourse will focus on the reasons for supporting your specific purpose statement. Read below about persuasive institutional consideration strategies.
<h3>What are persuasive strategies?</h3>
The persuasive strategies are logos, ethos and pathos. The peak effective persuasive communication usually has a mix of all three strategies. Logos uses logic or reason to reach a conclusion, while ethos depends upon the credibility of the author or speaker.
Therefore, the correct answer is as given above
learn more about persuasive strategies: brainly.com/question/24450505
#SPJ1
A selfish leader that lets his/her desires above the good of their people.