Answer:
The wholesale cost for the pianos that Darnell pays the manufacturer - explicit cost
The salary Darnell could earn if he worked as an accountant - implicit cost
The wages and utility bills that Darnell pays - explicit cost
The rental income Darnell could receive if he chose to rent out his showroom.-implicit cost
Explanation:
Explicit cost includes the amount expended in running the business.
They include rent , salary and cost of raw materials
Explicit cost is used in determining accounting profit
Implicit cost or opportunity cost is the cost of the next best option forgone when one alternative is chosen over other alternatives
Implicit cost is used in determining economic profit
If Darnell didn't use his showroom, he could have rented it out. Renting it out is his next best option that was forgone. Thus, it is an implicit cost
If Darnell didn't start his business, he could have been working as an accountant. The amount he could have earned as an accountant is his implicit cost
Los Angeles Dodgers pitcher Clayton Kershaw has a seven year contract that gives him an average annual salary of $30.7 million. Assuming he starts 30 games in a season ( and his salary is solely for pitching, how much is he paid per game
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Assume , and suppose that is initially equal to 0. Suppose that the rate of unemployment is initially equal to the natural rate. In year , the authorities decide to bring the unemployment rate down to 3% and hold it there forever. b. Determine the rate of inflation in years , , , and . c. Do you believe the answer given in (b)
The question is incomplete. The complete question is :
Suppose that the Phillips curve is given by :
[tex]$\pi_t=\pi_t^e+0.1-2u_t$[/tex]
a). What is the natural rate of unemployment ?
Assuming [tex]$\pi_t^e=\theta \pi_{t-1}$[/tex] , and suppose that [tex]$\theta$[/tex] is initially equal to 0. Suppose that the rate of unemployment is initially equal to the natural rate. In year t, the authorities decide to bring the unemployment rate down to 3% and hold it there forever.
b). Determine the rate of inflation in years t, t+1, t+2 and t+5.
c). Do you believe the answer given in (b)? Why or why not?
Solution :
Given the equation :
[tex]$\pi_t=\pi_t^e+0.1-2u_t$[/tex]
a). At [tex]$u_N$[/tex], [tex]$\pi_t = \pi_t^e$[/tex] (Inflationary exponents are constant)
[tex]$0.1 = 2u_N$[/tex]
∴ [tex]$u_N=0.05$[/tex]
= 5%
b). [tex]$\pi t^e=\theta \pi_{t-1}$[/tex]
Let [tex]$\theta = 0$[/tex], then [tex]$\pi t^e = 0$[/tex], [tex]u-u_N=3\%[/tex]
Now for year t [tex]$\pi t^e=0, \pi_t= 0.1-2(0.03)=0.04=4\%$[/tex]
[tex]$(t+1) : \pi (t+1)^e=0, \pi (t+1) = \pi t = 4\%[/tex]
[tex]$= \pi (t+2)= \pi (t+5) = 4\%$[/tex]
c). No, I do not believe as
[tex]\pi t^e=0[/tex], but πt comes out to be 4%, [tex]$\pi (t+1)^e=0$[/tex] but [tex]\pi (t+1)= 4 \%[/tex].
If inflation is consistently positive, why to make the expectations of zero percentage.
Cape Corp. will pay a dividend of $3.60 next year. The company has stated that it will maintain a constant growth rate of 5 percent a year forever. a. If you want a return of 17 percent, how much will you pay for the stock
Answer:
$30
Explanation:
according to the constant dividend growth model
price = d1 / (r - g)
d1 = next dividend to be paid
r = cost of equity
g = growth rate
$3.6 / (0.17 - 0.05)
$3.60 / 0.12 = $30
Short Answer 7: If the government announced that they were going to reduce the income tax next year, financed by finding a large and previously-unknown warehouse of real goods. What would happen to labor
Answer:
The labor would increase
Explanation:
When the government decides to lower the income tax in the coming year, which is financed by the findings of a large as well as a previously unknown warehouse for real goods, then there would be an increase in the labor as the reduction in the income tax would cause more and more investment. And thus organizations and firms increase their efficiencies and create more and more output by increasing the labor.
Swifty Company has identified that the cost of a new computer will be $30000, but with the use of the new computer, net income will increase by $3000 a year. If depreciation expense is $1000 a year, the cash payback period is: 30.0 years. 10.0 years. 7.5 years. 15.0 years. Save for LaterAtte
Answer:
10.0 years
Explanation:
The computation of the payback period is shown below
We know that
Payback period = initial cost ÷ increase in net income
= $30,000 ÷ $3,000
= 10 years
As the depreciation expense is a non-cash expense so we dont considered it
Therefore the first option is correct
Suppose that the production function is y= 9k^0.5 N^0.5. With this production function, the marginal product of labor is MPN= 4.5K^0.5 N^-0.5. The capital stock is K= 25. The labor supply curve is NS= 100[(1-t)w]^2, where w is the real wage rate, t is the tax rate on labor income, and hence (1-t)w is the after-tax real wage rate.
Required:
a. Assume that the tax rate on labor income, t, equals zero. Find the equation of the labor demand curve. Calculate the equilibrium levels of the real wage and employ- ment, the level of full-employment output, and the total after-tax wage income of workers.
b. Repeat part (a) under the assumption that the tax rate on labor income, t, equals 0.6.
Answer:
A) i) w/P = MPN , ( NS ) = 100[ (1-t) w]^2
ii) w = 1.5 , N = 225,
iii) y = 675 ,
iv) 337.5
B) i) ( NS ) = 100[(1-0.6)w]^2
ii) w = 2.372 , N = 90
iii) y = 426.91
iv) 85.839
Explanation:
Given data :
Production function ( y ) = 9k^0.5 N^0.5
MPN = 4.5k^0.5N^-0.5
capital stock ( K ) = 25
labor supply curve ( NS ) = 100[ (1-t) w]^2
assume P = 1
a) Determine
i) equation of labor demand curve = w/P = MPN
where; w = 22.5 N^-0.5 , N=506.25/(w^2)
labor supply curve ( NS ) = 100[ (1-t) w]^2
ii) equilibrium levels of real wage and employment
506.25/(w^2) = 100[(1-t)w]^2 ( equilibrium condition )
w ( equilibrium level of real wage ) = 1.5
equilibrium level of employment = 100[(1-t)w]^2 ; where t = 0 , w = 1.5
= 100 ( 1 * 1.5 )^2
N = 225
iii) level of full-employment y = 9k^0.5 N^0.5 ; where N = 225 , k = 25
= 9(25)^0.5 * (225)^0.5
y = 675
iv) Total after-tax wage income of workers
= w*N = ( 225 * 1.5 ) = 337.5
B) assuming t = 0.6
i) equation of labor demand curve
labor supply curve ( NS ) = 100[(1-0.6)w]^2 = 16 w^2
ii) equilibrium levels ; 16w^2 = 506.25/(w^2).
w( equilibrium real wage ) = 2.372
Equilibrium employment ( N )= 16 * ( 2.372 )^2 =90
iii) level of full employment y = 9k^0.5 * 90^0.5
= 9(25)^0.5 * 90^0.5 = 426.91
iv) Total after tax wage/income of workers
= (1-0.6)*2.372*90 = 85.839
Net Zero Products, a wholesaler of sustainable raw materials. Prepared the following aging of receivables analysis. Days Past Due Total 0 1 to 30 31 to 60 61 to 90 Over 90 Accounts receivable $ 115,200 $ 80,000 $ 18,000 $ 7,200 $ 4,000 $ 6,000 Percent uncollectible 1 % 3 % 5 % 8 % 11 % 1. Estimate the balance of the Allowance for Doubtful Accounts using the aging of accounts receivable method. 2. Prepare the adjusting entry to record bad debts expense assuming the unadjusted balance in the Allowance for Doubtful Accounts is a $1,000 credit.
Answer:
Net Zero Products
1. The balance of the Allowance for Doubtful Accounts using the aging of accounts receivable method is:
= $2,680.
2. The Adjusting Entry:
Debit Bad Debts Expense $1,680
Credit Allowance for Doubtful Accounts $1,680
To record bad debts expense and to bring the balance of the Allowance for Doubtful Accounts to a credit balance of $2,680.
Explanation:
a) Data and Calculations:
Days Past Due Total Percent Amount
AR Uncollectible Uncollectible
0 $80,000 1 % $800
1 to 30 $18,000 3 % 540
31 to 60 $7,200 5 % 360
61 to 90 $4,000 8 % 320
Over 90 $6,000 11 % 660
Total $ 115,200 $2,680
Allowance for Doubtful Accounts:
Unadjusted balance = $1,000
Adjusted balance 2,680
Bad Debts Expense = $1,680
contents of the workmen's compensation act
Answer:
The Workmen's Compensation Act, 1923 provides for payment of compensation to workmen (or their dependants) in case of personal injury caused by accident or certain occupational diseases arising out of and in the course of employment and resulting in disablement or death. The Act was last amended in 1976.
Hope this answer is right!
At the beginning of the year, American International had inventory worth $325,500 at cost. At the end of the year, the cost value of the inventory was $540,250. If annual cost of goods sold was $1,978,250 find the inventory turnover at cost for the year. (Round your answer to the nearest tenth) Group of answer choices
Answer:
Inventory turnover= 4.57
Explanation:
To calculate the inventory turnover, we need to use the following formula:
Inventory turnover= Cost of goods sold/ average inventory
Average inventory= (beginning inventory + ending inventory) / 2
Average inventory= (325,500 + 540,250) / 2
Average inventory= 432,875
Inventory turnover= 1,978,250 / 432,875
Inventory turnover= 4.57
Molly, a company mediator, had agreed to help Martin and Samir. The two men had been in constant disagreement ever since they became co-managers of the marketing department two months ago, and this disagreement was starting to impact all parts of the department. During a mediation session, Molly asked the men to explain their conflict over a recent business proposal. "Tell me exactly which part of the proposal is causing the issues," she instructed.
"Well," Samir started cautiously, "I grew up in Arizona, and I know that the Hispanic American community there sometimes does things differently from the way we do things here in New York. Martin wants to try to close the deal quickly, but I don't think that will work. We need to focus on building relationships. I'm afraid Martin's way of operating might cause some conflict with the client."
"But Samir's approach will take too long! Do you want to be successful or not?" Martin said.
By taking into account differences in the Hispanic American community's cultural orientation, Samir is considering their __________ when determining the proposal approach.
a) intercultural inventory
b) subculture
c) preferred conflict style
d) cross-culture
By taking into account differences in the Hispanic American community's cultural orientation, Samir is considering their subculture when determining the proposal approach. Thus, option B is the correct option.
In this context, Samir is recognizing that the Hispanic American community in Arizona has a distinct cultural background that influences their behaviors and preferences. This cultural background can be considered a subculture, which is a smaller cultural group within a larger culture, sharing certain norms, values, and practices that differentiate them from the dominant culture.
Samir is taking into account this subculture's perspective when considering the approach to the proposal, recognizing that their way of doing things might differ from the New York business norms.
Thus, option B is the correct option.
Learn more about subculture here:
https://brainly.com/question/28585493
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Assume the single-factor model applies and a portfolio exists such that 65 percent of the funds are invested in risky Security Q and the rest in the risk-free asset. Security Q has a beta of 1.5. The portfolio has a beta of:________
a. 1.500.
b. .925.
c. .650.
d. .975.
e. 1.000.
Answer:
d. .975.
Explanation:
The computation of the portfolio beta is shown below;
Portfolio beta = Respective betas × Respective weights
= (0.65 × 1.5) + (0.35 × 0)
= 0.975 + 0
= 0.975
Hence, the portfolio has a beta of 0.975
We simply applied the above formula so that the correct beta could come
A total materials variance is analyzed in terms of quantity and quality variances. tight and loose variances. price and quantity variances. buy and sell variances.
Answer:
price and quantity variances.
Explanation:
In Financial accounting, costing is the measurement of the cost of production of goods and services by assessing the fixed costs and variable costs associated with each step of production.
Manufacturing costs can be defined as the overall costs associated with the acquisition of resources such as materials and the cost of converting these raw materials into finished goods. Manufacturing costs include direct labor costs, direct materials cost and manufacturing overhead costs.
Total direct materials variance gives the difference between the budgeted cost and actual cost of a unit of goods produced.
Generally, a total materials variance is analyzed in terms of price and quantity variances used by a manufacturer in the manufacturing of a particular product.
The estimates of the manufacturing overhead and of machine-hours were made at the beginning of the year for the purpose of computing the company's predetermined overhead rate for the year. The predetermined overhead rate is closest to:
Answer:
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Answer:
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Flagstaff Company has budgeted production units of 9,000 for July and 9,200 for August. The direct labor requirement per unit is 0.50 hours. Labor is paid at the rate of $22 per hour. The total cost of direct labor budgeted for the month of August is:
Answer:
the total cost of direct labor budgeted for the month of August is $101,200
Explanation:
The computation of the total cost of direct labor budgeted is shown below:
Direct labor cost is
= 9,200 × .50 hours × $22 per hour
= $101,200
Hence, the total cost of direct labor budgeted for the month of August is $101,200
The same should be relevant
Ramble On Co. wishes to maintain a growth rate of 13.6 percent per year, a debt-equity ratio of 1.8, and a dividend payout ratio of 30 percent. The ratio of total assets to sales is constant at .98. What profit margin must the firm achieve
Answer: 5.99%
Explanation:
Based on the question,
Dividend payout ratio = 30%
Therefore, the retention ratio will be:
= 1 - 30%
= 70%
Growth rate = 13.6%
We'll the use the sustainable growth rate formula which will be:
0.136 = (ROE x 0.7)/ (1-(ROE x 0.7))
0.136(1 - (0.7ROE)) = 0.7ROE
ROE = 0.136/0.7952
ROE = 0.171026
Then, the Profit margin will be:
ROE = Profit Margin x Asset Turnover x Equity multiplier
0.171026 = PM x (1/0.98) x (1 + 1.8)
0.171026 = PM x (1/0.98) x 2.8
PM = 0.171026 x 0.98/2.8
PM = 0.0598591
Profit margin = 5.99%
Assume you purchase a property and you expect to earn the following annual cash flows: Year 1 <$50,000> Year 2 $100,000 Year 3 $105,000 Year 4 $110,250 Year 5 $115,762 Assuming a discount rate of 10%, what is the present value of these cash flows
Answer:
$263,259.46
Explanation:
Present value is the sum of discounted cash flows
Present value can be calculated using a financial calculator
Cash flow in year 1 = -$50,000
Cash flow in year 2 = $100,000
Cash flow in year 3 = $105,000
Cash flow in year 4 = $110,250
Cash flow in year 5 = $115,762
I = 10%
PV = 263,259.46
To determine the PV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
which one between vodacom and MTN can be considered as price leader in South Africa
Answer:
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Potential entrepreneurs would be well advised to surround themselves with people who are smarter than they are.
a. True
b. False
Answer:
a. True
Explanation:
The entrepreneurs who are potential wants them to surround themselves with the people who are more smarter with them so that they would feel more challenging due to which they make the plans accordingly also it keeps the eye to the people what they are doing so accordingly they would make the strategies in order to capture the market share
therefore the given statement is true
Contingency approach notion
Answer:
Following are the responses to the given choices:
Explanation:
The contingency approach is also an organizational argument that assumes that the best way to manage, manage, or choice is not feasible. Instead, it is also the internally and externally situation that depends again on the best course of action.
It helps the manager improve leadership and decision-making. Emergency provides employees various options which enable people to grow & share their thoughts with the company. It helps develop the structure as an organizational structure and to design appropriate systems for data choices.
Assume that total costs assigned to the setup activity cost pool in June are $60,000 and 50 setups were completed in June. Further, assume that during June machines were setup 12 times to make product G10. The total setup cost that would be assigned to product G10 would be:
Answer:
Allocated cost= $14,400
Explanation:
First, we need to calculate the allocation rate for setup:
Cost allocation rate= total estimated costs for the period/ total amount of allocation base
Cost allocation rate= 60,000 / 50
Cost allocation rate= $1,200 per setup
Now, we can allocate setup cost to G10:
Allocated cost= 1,200*12
Allocated cost= $14,400
A reward or benefit meant to encourage economic behavior is
Answer:
incentives
Explanation:
Lucy has decided to save for a vacation in 18 months. She will save the money into a short-term investment account returning 4% annually. How much will she have to put away at the beginning of each month if the vacation cost is $15,000
Answer:
Monthly deposit= $810.20
Explanation:
Giving the following information:
Number of periods (n)= 18 months
Interest rate (i)= 0.04/12= 0.0033
Future value (FV)= $15,000
To calculate the monthly deposit, we need to use the following formula:
FV= {A*[(1+i)^n-1]}/i
A= monthly deposit
Isolating A:
A= (FV*i)/{[(1+i)^n]-1}
A= (15,000*0.0033) / [(1.0033^18) - 1]
A= $810.20
Last year, BTA Corporation, a calendar-year taxpayer, reported a net operating loss of $10,000 and a $0 tax liability. BTA confidently anticipates a current year tax liability of $240,000.
What minimum estimated tax payments should BTA make for the first, second, third, and fourth quartyers respectively (ignore the annualized income method), assuming the following?.
Required:
a. BTA is not considered to be a large corporation for estimatedtax purposes
b. BTA is considered to be a large corporation for estimated tax purposes?
Answer and Explanation:
a. In the case when the BTA does not have the tax liability previous year so it would use the present year liability to measure out the minimum predicted tax payment quarter wise
So the current year tax liability is $240,000
So the estimated tax payment is
= $240,000 × 25%
= $60,000 per quarter
b. In this given case also the predicted quarterly tax payment is $60,000 because the BTA cannot applied the previous year tax exception for any type of quarter
On June 30, 2024, L. N. Bean issued $30 million of its 8% bonds for $28 million. The bonds were priced to yield 10%. Interest is payable semiannually on December 31 and July 1. If the effective interest method is used, how much bond interest expense should the company report for the 6 months ended December 31, 2024
Answer:
$1,400,000
Explanation:
Calculation to determine how much bond interest expense should the company report for the 6 months ended December 31, 2024
December 31, 2024 Bond interest expense = Carrying value * Effective interest rate/2
Let plug in the formula
December 31, 2024 Bond interest expense= $28,000,000 * 10% / 2
December 31, 2024 Bond interest expense= $1,400,000
Therefore the amount of bond interest expense should the company should report for the 6 months ended December 31, 2024 is $1,400,000
The annual demand of a product is 12,000 units, the ordering cost is $6 per order, and the holding cost is $2.50 per unit per year. Calculate the optimal order quantity using the fixed-order quantity model. [Select the appropriate range in which your answer falls.]
Answer: 240
Explanation:
Since the annual demand of a product is 12,000 units, the ordering cost is $6 per order, and the holding cost is $2.50 per unit per year, then the optimal order quantity will be calculated as:
Optimal order quantity = √(2 × Annual demand × Ordering cost / Holding cost)
where,
Annual demand = 12000
Ordering cost = 6
Holding cost = 2.5
Optimal order quantity will be:
= √(2 × 12000 × 6/2.5)
== √(144000/2.5)
= ✓57600
= 240
The outputs of a computerized accounting information system are called A. reports. B. software. C. processing. D. purchase invoices.
Answer:
Option A
Explanation:
In simple words, The numerous outputs of an accountancy information systems demonstrate the platform's flexibility in data processing. Accounts receivable ageing reports based on user knowledge, amortization plans for capital assets, and trial balancing for financial statements are all produced by an AIS.
This, from the above we can conclude that the correct option is A.
A. A stock's returns have the following distribution:
Demand for the
Company's Products Probability of This
Demand Occurring Rate of Return If
This Demand Occurs
Weak 0.1 (22%)
Below average 0.2 (12)
Average 0.3 17
Above average 0.2 33
Strong 0.2 56
1.0
Calculate the stock's expected return. Round your answer to two decimal places.
%
Calculate the stock's standard deviation. Do not round intermediate calculations. Round your answer to two decimal places.
%
Calculate the stock's coefficient of variation. Round your answer to two decimal places.
B. A stock has a required return of 16%; the risk-free rate is 4.5%; and the market risk premium is 5%.
What is the stock's beta? Round your answer to two decimal places.
If the market risk premium increased to 7%, what would happen to the stock's required rate of return? Assume that the risk-free rate and the beta remain unchanged. :
I. If the stock's beta is greater than 1.0, then the change in required rate of return will be greater than the change in the market risk premium.
II. If the stock's beta is less than 1.0, then the change in required rate of return will be greater than the change in the market risk premium.
III. If the stock's beta is greater than 1.0, then the change in required rate of return will be less than the change in the market risk premium.
IV. If the stock's beta is equal to 1.0, then the change in required rate of return will be greater than the change in the market risk premium.
V. If the stock's beta is equal to 1.0, then the change in required rate of return will be less than the change in the market risk premium.
New stock's required rate of return will be ?%. Round your answer to two decimal places.
Answer:
Following are the response to the given question:
Explanation:
For question 1:
The weighted average of each return is the expected return.
[tex]Expected\ return = 0.1 \times -0.22 + 0.2 \times -0.12 + 0.3 \times 0.17 + 0.2 \times 0.33 + 0.2 \times 0.56 \\\\[/tex]
[tex]= 0.1830 \\\\= 18.30\%[/tex]
For question 2:
Standard deviation is a measured source of the square deviations from the mean via probability.
[tex]Std \ dev = [0.1 \times (0.183-(-0.22))^2 + 0.2 \times (0.183-(-0.12))^2 + 0.3\times(0.183-0.17)^2 + 0.2\times (0.183-0.33)^2 + 0.2\times (0.183-0.56)^2]^{(\frac{1}{2})}\\\\[/tex]
[tex]= 0.2596 \\\\= 25.96\%[/tex]
For question 3:
For point a:
[tex]\text{Coefficient of variation} = \frac{std \ dev}{expected\ return} \\\\[/tex]
[tex]=\frac{0.2596}{0.183} \\\\= 1.42[/tex]
For point b:
As per the CAPM: [tex]\text{Required return = risk free rate + beta}\times \text{market risk premium}[/tex]
[tex]\to 16\% = 4.5\% + beta\times 5\%\\\\\to beta = 2.3[/tex]
In Option I:
When the beta of the stock exceeds 1.0, the change in the required rate of return must be higher than the increase in the premium of market risk. Beta is the degree to which stock return changes as market returns change.
[tex]\text{Required return = risk free rate + beta}\times \text{market risk premium}[/tex]
[tex]Required \ return = 4.5\% + 2.3\times 7\%\\\\Required \ return = 20.6\%\\\\[/tex]
In the liquidation of a partnership, any gain or loss on the realization of noncash assets should be allocated Group of answer choices first to creditors and the remainder to partners. to the partners on the basis of their capital balances. to the partners on the basis of their income-sharing ratio. only after all creditors have been paid.
Answer:
to the partners on the basis of their capital balances.
Explanation:
When the partnership is liquidated so any gain or loss that should be realized on non-cash asset should be distributed to the partners based on their capital balances. As at the time of gain or loss the sale of the non-cash assets should be distributed to the partners at their profit sharing ratio
therefore as per the given situation, the above represent the answer
You sell 25,000 loaf of bread per year. The carrying cost associated the main ingredient wheat flour is estimated to be $8 per unit (amount used for 1 loaf of bread) per year, and the ordering cost is $10 per order. And assume 1 year is 300 days and lead time is 3 days.
Required:
a. What is the EOQ?
b. How much money you will lose if you order 300 units of wheat flour? Calculate the total cost of inventory with EOQ model and with order size is 300. The difference will give you the answer.
c. Calculate the re-order point (assuming no uncertainty)?
Answer:
Annual Demand (D) = 25000
Carrying Cost (H) = 8
Ordering Costs (S) = 10
Number of working days = 300
Lead Time (Lt) = 3 days
a. EOQ = Sqrt (2*D*S/H)
EOQ = Sqrt (2*25000*10/8)
EOQ = Sqrt (62500)
EOQ = 250
b. Total Cost = (D * S) / EOQ + (EOQ * H) / 2
Total Cost = (25000 * 10) / 250 + (250 * 8) / 2
Total Cost = 1000 + 1000
Total Cost = 2000
Now, we calculate total Cost with order size: of 300
Total Cost = (25000 * 10) / 300 + (300 * 8) / 2
Total Costs = 833.3333 + 1200
Total Cost = 2,033.3333
The amount to lost if we order 300 units of wheat flour is as follows
= 2033.33 - 2000
= $33.33
3. ROP = (D / Number of working days) x Lt
ROP = (25000 / 300) * 3
ROP = 83.3333 * 3
ROP = 249.9999
ROP = 250
Miracle Clean's variable costs are $3.00 per bottle and Fixed Expenses are $350,000 per year. The company currently sells 150,000 bottles for $6.50 which results in profit of $175,000. The company is considering raising the selling price to $7.00 per bottle which is expected to decrease sales by 20%. If the price is raised, the number of units that must be sold to keep the profits unchanged is
Answer:
131,250= number of units
Explanation:
Giving the following information:
We need to calculate the number of units to be sold to maintain a profit of $175,000.
Unitary variable cost= $3
Fixed expenses= $350,000
Selling price= $7
Net income= total contribution margin - fixed cost
175,000= number of units*(7 - 3) - 350,000
525,000 = number of units*4
525,000 / 4= number of units
131,250= number of units
