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Phantasy [73]
3 years ago
6

Impala is currently producing 100 units of a necessary component part by incurring $42,000 in direct materials, $8,750 in direct

labor, $15,750 in variable overhead, and $10,500 in fixed overhead. Impala can purchase the component externally for $66,500 and $1,750 of fixed costs can be avoided. What should Impala do, and why?
Business
1 answer:
photoshop1234 [79]3 years ago
6 0

Answer:

If Impala decides to buy from the external source , it would then save the fixed of $1,750

Decision: Impala should be buy from the external source

Explanation:

<em>To determine the appropriate course of action, we shall determine whether there would be a net savings in cash flow as a result of purchasing externally or not.</em>

The relevant cash flows figures include:

  1. Internal variable cost of production
  2. External purchase price
  3. Savings in internal; fixed cost as result of buying outside

Variable cost of internal production = 42,000 + 8,750 + 15,750 = 66,500

Increase in variable cost if purchased externally = 66500 - 66500 = 0

If Impala decides to buy from the external source , it would then save the fixed of $1,750

Decision: Impala should be buy from the external source

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Myers Company acquired a 60% interest in Gannon Corporation on December 31, 2020 for $1,775,000. During 2021, Gannon had net inc
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Answer:

The answer is $2,225,000

Explanation:

Cost of acquisition is $1,775,000

Meyer company's share of net income in Gannon corporation:

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= $600,000

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60% of $250,000

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$1,775,000 + $600,000 – $150,000

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6 0
3 years ago
High flyer, inc., wishes to maintain a growth rate of 16 percent per year and a debt-equity ratio of 0.90. the profit margin is
Xelga [282]

Answer: The dividend payout ratio is 46.19%.

We follow these steps in order to arrive at the answer:

We begin with the DuPont identity of RoE.

<u>DuPont Identity:</u>

RoE = Net Profit Margin * Asset Turnover Ratio * Equity Multiplier

Now,  

Equity Multiplier = \frac{1}{Debt Ratio}

And Debt Ratio is also expressed as:

Debt Ratio = \frac{D/E}{1+D/E}

where D/E represents the Debt-Equity Ratio.

Substituting the value of D/E ratio from the question in the debt ratio formula above we get,

Debt Ratio = \frac{0.9}{1+0.9}

Debt Ratio = \frac{0.9}{1.9}----(1)

Substituting (1) in the equity multiplier formula above we get,

Equity Multiplier = \frac{1}{\frac{0.9}{1.9}}

Equity Multiplier = \frac{1.9}{0.9}

Substituting Equity Multiplier from above and the relevant numbers from the question in the DuPont identity we get,

RoE = 0.048 * 1.08 * \frac{1.9}{0.9}

RoE = 0.10944

The relationship between RoE and earnings growth rate g is given by the following formula:

RoE = \frac{g}{(1-p)}, where p is the dividend payout ratio.

Plugging in the values in the formula above we get,

0.10944 = \frac{0.16}{(1-p)}

1-p = \frac{0.16}{0.10944}

1-p = 1.461988304

p = 0.461988304 or 46.19%

3 0
3 years ago
A special arrangement of machinery and equipment to focus on production of a single product or group of related​ products" descr
ratelena [41]

Answer:

C.

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Is a temporary assembly-line-oriented arrangement of machines and personnel in what is ordinarily a process-oriented facility.

Workcells are designed to improve the process flow and eliminating waste.

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- Group technology identifies products that have similar characteristics for particular cells.

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- A high level of training and flexibility on the part of employees.

- Either staff support or flexible, imaginative employees to establish work cells initially.

4 0
3 years ago
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