Answer:
The contribution margin statement is found below with a contribution margin of $149,800 and operating income of $145100
Explanation:
Contribution Margin Statement
Sales revenue ($720*700) $504000
Variable costs:
Cost of generators($470*700) ($329000)
Commission(5%*$504000) <u> ($25200)</u>
Contribution margin $149,800
Fixed costs
Rent ($3000)
Additional commission <u> ($1,700)</u>
Operating income $145100
Cost of rent is fixed as it is not depended on the quantity of generators sold.
Additional commission is fixed amount,so it is a fixed cost, while costs of buying generators as well as the commission of 5% are both variable costs.
Answer:
The answer is undercapitalization
Explanation:
It is evident that the business is undercapitalized. Undercapitalization is a situation when a company/firm does not have enough or the needed funds to run the business operations or pay his creditors.
Angelo is undercapitalized because her sales are not generating the needed cash flows coupled with her inadequate capital. So she needs to raise enough capital or develop new strategy to increase her sales.
Answer:
The answer is D.
Explanation:
The demand curve faced by perfectly competitive firm is horizontal. This means that if individual firm charges price above the market price, it will not sell anything.
The curve is the same as marginal revenue curve because change in total revenue from selling one more unit(marginal revenue) is the constant market price.
And it holds in perfect market that price equals marginal revenue (P=MR).
The correct option is D.
The error of Naomi is that she included the receipts of interest, receipts of dividends, and proceeds from planned sales of plant assets in the cash receipts section. This section would only include the cash sales and collection of accounts receivable with the forecasted sales per month of the company. As a result of this error, the cash receipts would be too high.
Answer:
Risk Premium
Explanation:
The Excess rate received over the risk free rate to a investor who invested in a risky asset is known as Risk premium. The concept of High Risk High Reward and Low Risk Low Reward applicable here. As in risky investment the investor is exposed to the risk of loss so, he/she requires some extra return for this exposure. Investing in risk free rate is much safer than in a risky investment.
