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Elodia [21]
3 years ago
5

2-a. Refer to the original data. How much will net operating income increase (decrease) per month if the company uses higher-qua

lity components that increase the variable expense by $4 per unit and increase unit sales by 20%. 2-b. Should the higher-quality components be used
Business
1 answer:
Vadim26 [7]3 years ago
8 0

The original data is :

Data for Hermann Corporation

                                          Per unit     Percent of sales

Selling price                         $ 75              100%

Variable expenses                  51                 68

Contribution margin             $ 24               32%

The fixed expenses are $ 75,000 per month and the company is selling 4000 units per month.

Solution :

                                                     Present             Proposed

Sales                                             300000            375000

Less : Variable cost                      204000           275000

Contribution margin                     96000               100000

Less : Fixed expenses             <u>    75000     </u>      <u>     75000    </u>

Net income                                   21000                25000

The net operating income :      Increases          4000

Net operating income = increased sales Net income - current sales net income.

Therefore the higher quality component should be used.                                                            

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At October 1, Arcade Fire Enterprises reported stockholders' equity of $36,000. During October, no stock was issued and the comp
vivado [14]

Answer:

A. $8,000

Explanation:

Stockholders Equity Includes the Add-in-capital par value, Add-in-capital excess value of Common and Preferred, Net income accumulated value and dividends.

Ending Stockholders Equity = Beginning Stockholders Equity + Income for the period - Dividend paid During the period

$32,000 = $36,000 + $4,000 - Dividend paid During the period

$32,000 = $40,000 - Dividend paid During the period

Dividend paid During the period = $40,000 - $32,000

Dividend paid During the period = $8,000

3 0
4 years ago
a. Compute the expected rate of return for Acer common​ stock, which has a 1.5 beta. The​ risk-free rate is 4.5 percent and the
ira [324]

Answer:

(a) 12.75%

Explanation:

Given that,

Beta = 1.5

Risk-free rate = 4.5 percent

Expected return on market portfolio = 10 percent

Here, we are using CAPM:

(a) Expected rate of return for Acer common​ stock:

= Risk free rate + beta (Expected return on market Portfolio - Risk free rate)

= 4.5% + [1.5 (10% - 4.5%)]

= 0.045 + (1.5 × 0.055)

= 0.045 + 0.0825

= 0.1275 or 12.75%

(b) This rate is known as the fair rate which compensates the holder or investor for assuming the risk associated with it and for the time value of money.

8 0
3 years ago
For a competitive market, A. a seller can always increase her profit by raising the price of her product. B. a seller often char
PtichkaEL [24]

Answer: For a competitive market, <u><em>if a seller charges more than the going price, buyers will go elsewhere to make their purchases.</em></u>

Explanation:

A perfectly competitive market has the following characteristics:

(a). In this particular market there are many buyers and sellers.

(b). Also each company makes similar product. i.e. the products are identical in nature.  

(c). In this market buyers and sellers will have access to perfect information about price. and product.

(d). In a competitive market there are no barriers to entry into or exit from the market.

Therefore , <u><em>if a seller charges more than the going price, buyers will go elsewhere to make their purchases.</em></u>

3 0
4 years ago
Jose Suarez has been hired as sales manager at a new firm and is trying to come up with a sales force compensation method. He wo
Tomtit [17]

Answer:

straight commission

Explanation:

Straight commission refers to the commission in which only a sales percentage could be given in terms of commission no extra payment, no salary is given. The percentage could be based on the performance of the salesperson i.e how much sales he sold so according to that the percentage is given

Therefore the given situation represents the straight commission method

3 0
3 years ago
Suppose a president of a country uses $450 million to build public schools. The expenditure is entirely financed by borrowing. T
dem82 [27]
950 million dollars every year
7 0
3 years ago
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