1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
sdas [7]
3 years ago
12

Companies A and B are in the same industry and are identical except for cost structure. At a volume of 50,000 units, the compani

es have equal net incomes. At 60,000 units, Company A's net income would be substantially higher than B's. Based on this information,
A. Company A's cost structure has more variable costs than B's.
B. Company A's cost structure has higher fixed costs than B's.
C. Company B's cost structure has higher fixed costs than A's.
D. At a volume of 50,000 units, Company A's magnitude of operating leverage was lower than B's.
Business
1 answer:
ASHA 777 [7]3 years ago
5 0

Answer:

B. Company A's cost structure has higher fixed costs than B's.

Explanation:

Let's see the formula for income:

50,000 units x sales price - variable cost x 50,000 - fixed = net income

50,000 (sales - variable) - fixed = net income

At 50,000 both have equal net income.

Also we are given the fact that their sales is the same.

"identical except for cost structure"

So:

50,000 (S-V_a)-Fixed_a = 50,000 (S-V_b)-Fixed_b

We work it and remove sales from the equation:

50,000S-50,000V_a-Fixed_a = 50,000S-50,000V_b-Fixed_b

-50,000Variable_a-Fixed_a = -50,000Variable_b-Fixed_b

At 60,000 units, Company A has a higer income, so the increase of variable cost in company A is lower than company B

The cost of 10,000 more units is all variable cost, if Company A has more income, then their variable are lower.

If variable cost for 10,000 is lower, same applies for the variable cost for 50,000 so we have:

10,000Va < 10,000 Vb

50,000Va < 50,000Vb

So to have equal income at 50,000 units.

Fixed of A > Fixed of B

You might be interested in
Moerdyk Corporation's bonds have a 15-year maturity, a 7.25% semiannual coupon, and a par value of $1,000. The going interest ra
stellarik [79]

Answer:

$1,235.47

Explanation:

In this question, we use the present value formula which is shown in the spreadsheet.  

The NPER represents the time period.

Given that,  

Future value = $1,000

Rate of interest = 5%  ÷ 2 = 2.5%

NPER = 15 years × 2 = 30 years

PMT = $1,000 × 7.25% ÷ 2 = $36.25

The formula is shown below:

= PV(Rate;NPER;PMT;FV;type)

So, after solving this, the answer would be $1,235.47

7 0
3 years ago
On April 1, 2020, Vaughn Company assigns $524,600 of its accounts receivable to the Third National Bank as collateral for a $336
Stells [14]

Answer and Explanation:

The journal entry is shown below:

On April 1, 2020

Cash $315,016

Finance charge ($524,600 × 4%) $20,984  

            To Notes payable  $336,000

(Being the cash and finance charge is recorded)

Fo recording this we debited the cash and finance charge as it increased the assets and expenses and credited the note payable as it also increased the liabilities

5 0
3 years ago
A company has $107,000 in outstanding accounts receivable and it uses the allowance method to account for uncollectible accounts
yawa3891 [41]

Answer:

None of these

what would be the correct answer choice?

  • Assuming 5% of outstanding accounts receivable, the journal entry:

Dr Bad Debt Expense $ 6.320  

Cr Allowance for Uncollectible Accounts  $ 6.320

Explanation:

If the company applies the allowance method, it means that the account  

Allowance for Uncollectible Accounts must show as balance the  5% of outstanding receivables as debit.

Because the company has a credit balance in that account it's necessary to register an entry  that compensate the value as credit and reflect as debit the value estimated as 5% of account receivable.

  • Initial Balance  

Dr Accounts Receivable                              $ 107,000

Dr Allowance for Uncollectible Accounts  $ 970

  • The journal entry adjustment will be:

Dr Bad Debt Expense                                    $ 6,320  

Cr Allowance for Uncollectible Accounts  $ 6,320

  • FINAL Balance  

Dr Accounts Receivable                                    $ 107,000  

Cr Allowance for Uncollectible Accounts  $ 5,350

8 0
3 years ago
To persuade your boss to hire additional customer support​ staff, you might point to industry surveys that show how crucial cust
guapka [62]

Answer:

D. deductive

Explanation:

It seems that based on the information regarding the situation this is an example of deductive reasoning. This term refers to the process of reasoning by using one or various different statements together in order to come to a logical and reasonable conclusion. Which is what is happening in this situation since the information provided within the surveys will lead to your boss deducing that hiring additional staff is the best option.

5 0
3 years ago
For what reason may an employer legally NOT hire an applicant?
Andru [333]

<u>Answer:</u> Option C

<u>Explanation:</u>

The applicant might not possess the skills required to do the job or he may not be able to meet the number of working hours required by the company. In this case the employer is not under pressure to recruit that employee. Employer cannot reject any applicant for the reason of applicant's disability, age as 55 years or based on the nationality.

Labor standard act needs to be meet by the employer to hire legally or the employer will have to face the legal consequences.

4 0
3 years ago
Read 2 more answers
Other questions:
  • . How does the deforestation of rain forests impact global markets?. . . Global markets dictate the economy of developing countr
    9·2 answers
  • Predict how the price of athletic shorts would change if schools banned their use.
    5·1 answer
  • Freddy is purchasing a new car, and he has decided that gas mileage, price, reliability, and styling are important to him. These
    7·1 answer
  • Carol typed a memo to distribute to everyone in her department. To create this memo, she used a _____.
    6·1 answer
  • erest rate parity holds. The U.S. interest rate is 13 percent and the British interest rate is 10 percent. The forward rate on B
    11·1 answer
  • You must evaluate a proposal to buy a new milling machine. The base price is $120,000, and shipping and installation costs would
    14·1 answer
  • An organization estimated that in a particular year the population of a country spent ​$10.4 trillion in personal consumption. T
    10·1 answer
  • Trapper Corporation is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II). Und
    13·1 answer
  • Time line of cash dividend. Camelot Manufacturing, Inc. issues the following press release: "Camelot Manufacturing will pay a qu
    11·1 answer
  • Pearson Electric Company uses the high-low method to analyze mixed costs. The following information relates to the production da
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!