Suppose the economy starts off producing Natural Real GDP. Next, aggregate supply rises, ceteris paribus. As a result, the price
1 answer:
You might be interested in
Answer:
<u><em>Part a </em></u>
<u>Belmain Co.</u>
<u>Estimated Income statement for the year ended 2017.</u>
Sales ($240 x 12,000) $2,880,000
<u>Less Variable Costs :</u>
Direct Materials ($50.00 x 12,000) ($600,000)
Direct Labor ($30.00 x 12,000) ($360,000)
Factory Overheads ($6.00 x 12,000) ($72,000)
Sales Salaries and Commissions ( $4.00 x 12,000) ($48,000)
Miscellaneous selling expenses ( $1.00 x 12,000) ($12,000)
Supplies ($4.00 x 12,000) ($48,000)
Miscellaneous administrative expenses ($1.00 x 12,000) ($12,000)
Contribution $1,728,000
<u>Less Fixed Expenses :</u>
Factory overhead ($350,000)
Sales salaries and commissions ($340,000)
Advertising ($116,000)
Travel ($4,000)
Miscellaneous selling expense ($2,300)
Office and officers’ salaries ($325,000)
Supplies ($6,000)
Miscellaneous administrative expense ($8,700)
Net Income ( Loss) $576,000
<u><em>Part b</em></u>
0.6 or 60 %
<u><em>Part c</em></u>
Break-even sales (units) = 8,000
Break-even sales (dollars) = $1,920,000
<u><em>Part d</em></u>
<em>See attachment </em>
<u><em>Part e</em></u>
Margin of safety in dollars = $960,000
Margin of safety in percentage = 33.3 %
<em><u>Part f</u></em>
Operating Leverage = 3.00
Explanation:
<u>Income Statement :</u>
<em>Sales - Expenses = Income</em>
Note : I have separated Variable and Fixed Expenses
<u>Contribution Margin ratio :</u>
<em>Contribution Margin ratio = Contribution ÷ Sales</em>
= $1,728,000 ÷ $2,880,000
= 0.6 or 60 %
<u>Break-even sales ( units and dollars) :</u>
<em>Break-even sales (units) = Fixed Costs ÷ Contribution per unit</em>
= $1,152,000 ÷ $144.00
= 8,000
<em>Break-even sales (dollars) = Fixed Costs ÷ Contribution margin ratio</em>
= $1,152,000 ÷ 0.60
= $1,920,000
<u>Margin of safety in dollars and as a percentage of sales :</u>
<u />
<em>Margin of safety in dollars = Expected Sales (dollars) - Break-even sales (dollars)</em>
= $2,880,000 - $1,920,000
= $960,000
<em>Margin of safety in % = (Expected Sales - Break-even sales ) ÷ Expected Sales</em>
= $960,000 ÷ $2,880,000
= 33.3 %
<u>Operating leverage</u>
<em>Operating Leverage = Contribution ÷ Earnings Before Interest and Tax</em>
= $1,728,000 ÷ $576,000
= 3.00
The option of saving money that offers the most liquidity is a piggy bank. (option C)
<h3>What is liquidity?</h3>
Liquidity can be described as the ease with which an asset can easily be converted to cash. Paper currency and coins is the most liquid assets. Real estate is illiquid because it takes a long time for a real estate asset (e.g a house) to be sold and proceeds converted to cash.
Liquid assets earn less returns when compared with assets that are less liquid. This is because illiquid assets earn an illiquidity premium. An illiquidity premium compensates holders for holding an illiquid asset.
Money in a piggy bank is already in cash or coins and there is no need to convert it to cash again. Also, money in a piggybank is more accessible than the other options.
To learn more about liquidity, please check: brainly.com/question/15691477
#SPJ1
