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EastWind [94]
2 years ago
13

aner, Harris & Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm ha

s two offices—one in Chicago and one in Minneapolis. The firm classifies the direct costs of consulting jobs as variable costs. A contribution format segmented income statement for the company’s most recent year is given: Assume that Minneapolis’ sales by major market are: Market Minneapolis Medical Dental Sales $ 600,000 100 % $ 400,000 100 % $ 200,000 100 % Variable expenses 360,000 60 % 260,000 65 % 100,000 50 % Contribution margin 240,000 40 % 140,000 35 % 100,000 50 % Traceable fixed expenses 72,000 12 % 20,000 5 % 52,000 26 % Market segment margin 168,000 28 % $ 120,000 30 % $ 48,000 24 % Common fixed expenses not traceable to markets 18,000 3 % Office segment margin $ 150,000 25 % The company would like to initiate an intensive advertising campaign in one of the two market segments during the next month. The campaign would cost $8,000. Marketing studies indicate that such a campaign would increase sales in the Medical market by $70,000 or increase sales in the Dental market by $60,000. Required: 1. How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Medical Market? 2. How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Dental Market? 3. In which of the markets would you recommend that the company focus its advertising campaign?
Business
1 answer:
NeX [460]2 years ago
8 0

Answer:

1. $ 136,500

2. $70000

3. Medical market

Explanation:

1. Calculation to determine How much would the company's profits increase (decrease) if it implemented the advertising campaign in the MEDICAL MARKET

First is to calculate the sales

Sales = (400 000 + 70 000)

Sales = $470 000

Second step is to calculate the profit

Variable cost =$470 000 *65%

Variable cost=$305 500

Contribution =$470 000*35%

Contribution =$164,500

Fixed Expense= $28 000

Profit = $ 136,500

Now let calculate the Difference made by advertisement

Difference = 136500 - 120000

Difference=16500

2. Calculation to determine How much would the company's profits increase (decrease) if it implemented the advertising campaign in the

DENTAL MARKET

vcr Of The Dental market = 50%

Variable cost =50% $260 000

Variable cost = $130 000

Contribution = $130 000

Fixed expenses = $60 000

Profit = $70000

Now let determine difference made by the advertisement

Difference =(70000) - 48000

Difference= 22000

3. Based On the above calculation the markets I would recommend that the company focus its advertising campaign is medical market

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On December 31, 2020, Berclair Inc. had 600 million shares of common stock and 7 million shares of 9%, $100 par value cumulative
Debora [2.8K]

Answer:

The diluted EPS is $1.65

Explanation:

Solution

The Numerator (Basic EPS):

The Net income = $1,050 million

The Preferred dividends= 3mn * 9% * $ 100 = $ 27 million

because the preferred stock is cumulative, the dividend is deducted whether or not paid)

The Denominator (Basic EPS): Weighted average Number of shares

Now,

common stock outstanding (1/1 – 12/31)  600 million x (12/12) *1.05  = 630 million

The Treasury shares purchased (3/1 – 12/31)  (24) million x (10/12) *1.05  =(21) million

The  shares  treasury sold  (10/1 – 12/31)  (4) million x (3/12)  =1

The average  weighted number of shares  =610 million

so,

Basic EPS = ($1,050-27) ÷ 610 = $1.68

Stock Options

The stock choice are dilutive because exercise price is lesser than market price of $ 70 per share.

By applying the treasury stock method.

Exercise is supposed to take place at the later of the date of issue (9/13/21) or the beginning of the year (1/1/21). Assume exercise 1/1/21

The Treasury Stock Method suggests that the proceeds received upon exercise of $1,680 (30 million x $56) are used to purchase back stock at the market price average, for example  $1,680 ÷ $70 = 24 million

The net goes higher in the number of shares = 6 million  (30 million issued upon exercise – 24 million repurchased)

Convertible Bonds

By applying method if bonds are transformed into common stock.  however,a step by step approach to calculate nature of dilution. is determined

Now,

The shares issued on conversion = 6 million

The Interest paid, net of tax = $3 [(8% x $50) x 75%]

The Interest per shares issued = 3/6 = $ 0.5 per share

The EPS without assumed conversion = ($1,050 - $27+3) ÷ (610 + 6+6) = $1.65

The convertible bonds are dilutive because $1.65 is less than $1.68

Therefore, diluted EPS = ($1,050 - $27+3) ÷ (610 + 6+6) = $1.65

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3 years ago
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3 years ago
Suppose Dina is an avid reader and buys only comic books. Dina deposits $3,000 in a bank account that pays an annual nominal int
Tomtit [17]

Answer:

Instructions are listed below

Explanation:

Giving the following information:

Dina deposits $3,000 in a bank account that pays an annual nominal interest rate of 10%. The comic book is priced at $15.00.

We don't have the number of years on the investment. But we can figure out an answer.

With $3000 she can buy:

Number of comics= 3000/15= 200 comics.

Using the following formula we can calculate the amount of money that she will have at the end of several years.

FV= PV*(1+i)^n

For example:

1 year

FV= 3000*1.10^1= $3300

Comics= 3300/15= 220 comics

5 years:

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8 0
3 years ago
pure monopolist who is nondiscriminating must decrease price on all units of a product sold in order to sell additional units. T
coldgirl [10]

Answer: b. Marginal revenue is less than average revenue

Explanation:

Marginal revenue is the extra revenue received by selling one more unit of a good while Average revenue is the revenue generated on average by all units sold thus far.

If the monopolist has to reduce prices to sell more goods then it would mean that for every unit sold, the price would have reduced compared to the price of the last unit which translates to less revenue coming in per unit compared to the last unit.

On the other hand, on average, the higher prices of the earlier goods sold would keep the average revenue higher than the additional revenue (marginal revenue).  

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An architecture firm charges clients $250 per hour for their services, and they pay their architects an average of $175 per hour
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Answer:

A)$135,000

Explanation:

service fee      250

average wage 175

contribution 75 this is the ammount generate per hour billed

expected hours billed for the year 10,000

hours x contribution per hour = total contribution

10,000 x 75 =                  750,000

Operating cost             <u>  (615,000)  </u>

Earnings before taxes    135,000

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