You are in the business of making kombucha tea. Your variable costs to produce each bottle is $1. Your fixed costs are $100,000/year and you expect to sell 300,000 bottles in your first year. How many bottles must you sell at $3/bottle to cover your fixed costs and earn your target profit of $100,000

Answers

Answer 1

Answer:

Break-even point in units= 100,000 units

Explanation:

Giving the following information:

Your variable costs to produce each bottle is $1.

Your fixed costs are $100,000/year.

How many bottles must you sell at $3/bottle to cover your fixed costs and earn your target profit of $100,000

To calculate the number of units to be sold, we need to use the following formula:

Break-even point in units= (fixed costs + desired profit)/ contribution margin per unit

Break-even point in units= (200,000) / (3 - 1)

Break-even point in units= 100,000 units

Answer 2

The number of bottles that must be sold at $3 per bottle to earn a target profit of $100,000 is 200,000 bottles.

Data and Calculations:

Variable cost per bottle = $1

Fixed cost per year = $100,000

Expected sales units in the first year = 300,000 bottles

Selling price per bottle = $3

Target profit = $300,000

Contribution margin per unit = $2 ($3 - $1)

Contribution margin ratio = 67% ($2/$3 x 100)

Sales units to achieve target profit =  (Fixed Costs + Profit)/$2

= ($100,000 + $300,000)/$2

= 200,000 bottles

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Related Questions

Steel Tariffs Appear to Have Backfired on Bush
President Bush set aside his​ free-trade principles last year and imposed heavy tariffs on imported steel to help out struggling mills in Pennsylvania and West Virginia. Some economists say the tariffs may have cost more jobs than they​ saved, by driving up costs for automakers and other steel users.
Source: The Washington Post, September 19, 2003
Explain how a high tariff on steel imports can help domestic steel producers.
Explain how a high tariff on steel imports can harm steel users.
When a high tariff is placed on steel imports, U.S. steel producers produce______steel and they pay a ________price.
A. less; higher
B. more; lower
C. less; lower
D. more; higher

Answers

Answer:

Steel industry in the United States of America has had its up and down over the years. this is especially going by the fact that it is cheaper to import steel from outside America than to buy those produced in U.S. However, high tariff on steel import would enable the domestic steel producers to meet their obligation as well as recoup their investments in the steel industry in U.S.

For example, most construction based organisation would prefer to buy from domestic steel producer if the price and tariff of imported ones makes it extremely difficult to purchase.

On the other-hand, the high tariff placed on steel import could also harm steel users due to the fact that, the quality of steel which they buy from outside U.S would no longer be available to them.

Also, they would be forced to buy at whatever price from domestic producers whether they had need for the steel or not due to high tariff on imported ones.

When a high tariff is placed on steel imports, U.S. steel producers produce more steel and they pay a higher price.

Answer: D. more; higher

Explanation:

The statement of cash flows reports all but which of the following: Multiple Choice The financial position of the company at the end of the accounting period. Cash flows from financing activities. Cash flows from operating activities. Cash flows from investing activities. Significant noncash financing and investing activities.

Answers

Answer:

The financial position of the company at the end of the accounting period.

Explanation:

The cash flow statement is the statement that includes all the cash payment and cash receipts transactions held in the business. There are mainly three types of activities i.e operating activities, investing activities, and the financing activities

Also, it involves Significant noncash financing and investing activities.

but it does not reported the financial position of the business at the end of the accounting period

Hence, the first option is correct

Draiman Guitars is offering 110,000 shares of stock in an IPO by a general cash offer. The offer price is $39 per share and the underwriter's spread is 8 percent. The administrative costs are $350,000. What are the net proceeds to the company?

Answers

Answer:

$3,596,800

Explanation:

The computation of net proceeds to the company is shown below:-

Net proceeds = Number of shares of stock × Offer price × (1 - Underwriter spread percent) - Administrative cost

= 110,000 × $39 × (1- 0.08) - $350,000

= 110,000 × $39 × 0.92 - $350,000

= $3,946,800 - $350,000

= $3,596,800

So, for determining the net proceeds we simply applied the above formula.

The following legal claims exist for Huprey Co. Identify the accounting treatment for each claim as either (a) a liability that is recorded or (b) an item described in notes to its financial statements.1. Huprey (defendant) estimates that a pending lawsuit could result in damages of $1,550,000; it is unlikely that the plaintiff will win the case.a. A liability that is recorded.b. An item described in notes to its financial statements.2. Huprey faces a loss on a pending lawsuit that it is unlikely to lose; the amount is reasonably estimable.a. An item described in notes to its financial statements.b. A liability that is recorded.3. Huprey faces a probable loss on a pending lawsuit; the amount is reasonably estimable.a. An item described in notes to its financial statements.b. A liability that is recorded.

Answers

Answer:

Huprey Co.

Identifying the accounting treatment for each claim as either (a) a liability that is recorded or (b) an item described in notes to its financial statements:

1. Huprey (defendant) estimates that a pending lawsuit could result in damages of $1,550,000; it is unlikely that the plaintiff will win the case.a. A liability that is recorded.

b. An item described in notes to its financial statements.

2. Huprey faces a loss on a pending lawsuit that it is unlikely to lose; the amount is reasonably estimable.

a. An item described in notes to its financial statements. b. A liability that is recorded.

3. Huprey faces a probable loss on a pending lawsuit; the amount is reasonably estimable.a. An item described in notes to its financial statements.

b. A liability that is recorded.

Explanation:

Huprey Co. will recognize and record contingent liabilities in its accounts when it can be reasonably established that the future event will occur and the amount of the liability can be reasonably estimated. The implication is that Huprey Co. must establish two things before a contingent liability is recognized and recorded.  One is that the probability or the likelihood or the chance that the event will happen exists and can be estimated.  With the probability estimate, it becomes possible for Huprey Co. to also estimate the amount that the happening of the event will cost it.

February 1, 2018, Salisbury Company purchased land for the future factory location at a cost of $112,000. The dilapidated building that was on the property was demolished so that construction could begin on the new factory building. The new factory was completed on November 1, 2018. Costs incurred during this period were: Item Amount Demolition dilapidated building $2,000 Architect Fees $11,250 Legal Fees - for title search $1,450 Interest During Active Construction Period $5,025 Real estate transfer tax $975 Construction Costs $605,000 Using this information, how much should be recorded as the cost of the land?

Answers

Answer:

The cost of the land should be recorded as $108,350

Explanation:

Land cost =                                     $112,000

Demolition dilapidated building = $2,200

Legal fees - title search =               $1,450

Cost of land = Land cost - Demolition dilapidated building - Legal fees - title search

Cost of land = $112,000 - $2,200 - $1,450

Cost of land = $108,350

Che MFG Company experiences the following cost behavior patterns each week
Fixed costs: supervisor's salary $1,200; factory rent $2,900
Mixed costs: utilities $1,700+ $5.75 per unit
Variable costs per unit manufacturing labor wages $21.00; supplies used in production $9.00; packaging cost $2.75, warranty cost $4
Required: Compute total costs to be incurred for a week with 2,770 units of activity. (Do not round intermediate calculations.)
Total cost___________

Answers

Answer:

Total cost= $123,525

Explanation:

Giving the following information:

Fixed costs: supervisor's salary $1,200; factory rent $2,900

Mixed costs: utilities $1,700+ $5.75 per unit

Variable costs per unit manufacturing labor wages $21.00; supplies used in production $9.00; packaging cost $2.75, warranty cost $4

We need to determine the total cost of 2,770 units:

Total variable cost= 5.75*2,770 + 21*2,770 + 9*2,770 + 2.75*2,770 + 4*2,770

Total variable cost= $117,725

Total fixed costs= 1,200 + 2,900 + 1,700= $5,800

Total cost= 117,725 + 5,800= $123,525

You're about to buy a new car for $10,000. The dealer offers you a one-year loan where you pay $860.66 every month for the next 12 months. Since you pay $860.66 * 12 = $10,328 in total, the dealer claims that the loan's annual interest rate is (10,328-10,000)/10,000 = 3.28%. What is the actual effective annual rate?

Answers

Answer:

The actual effective annual rate is 3.33%.

Explanation:

Effective Annual Rate (EAR) refers to an interest rate has been adjusted for compounding over specified period of time.

Effective annual rate can therefore be described as the interest rate that paid to an investor in a year after compounding has been adjusted for.

Effective annual rate can be computed using the following formula:

EAR = [(1 + (i / n))^n] - 1 .............................(1)

Where;

i = Annual interest rate claimed by the dealer = 3.28%, or 0.0328

n = Number of compounding periods or months = 12

Substituting the values into equation (1), we have:

EAR = [(1 + (0.0328 / 12))^12] - 1 = 0.0332976137123635

EAR = 0.0333, or 3.33% approximately.

Therefore, the actual effective annual rate is 3.33%.

1. The "four Ms" of cause-and-effect diagrams are:______.
a. mentality, motivation, management, and manpower.
b. material, methods, men, and mental attitude.
c. material, machinery/equipment, manpower, and methods.
d. material, management, manpower, and motivation.
e. named after four quality experts.
2. A Systematic Approach to Capacity Decisions includes:A. Evaluate the alternativesB. Identify gapsC. Estimate capacity requirementsD. Develop alternativesE. All are correct

Answers

Answer:

1. C.  c. material, machinery/equipment, manpower, and methods.

2. E. All are correct

Explanation:

1. The cause-and-effect diagram also known as the Ishikawa diagram is used by organizations to find out the likely causes of unwanted problems. This diagram traces the roots of problems and helps managers discover the potential causes of these problems. The four M's that form the bone of the diagram to which other causes are traced include the;

a. material, which is about the products used in the production process and potential problems that can be attributed to them.

b. machinery/equipment, which is about the plant and likely problems that can arise from their use.

c. manpower, which is about the personnel used in the production process, and,

d. methods, which is about the systems adopted by the organization.

2. A systematic approach to capacity decisions include;

a. Estimation of capacity requirements

b. Identification of gaps by comparing the expected requirements with available capacity.

c. Develop alternative plans and methods that would help to reduce the gaps.

d. Evaluate the alternatives taking into consideration their qualitative and quantitative attributes.

1. The "four Ms" of cause-and-effect diagrams are material, machinery/equipment, manpower, and methods. Thus, option C is correct.

2. A Systematic Approach to Capacity Decisions includes all of the options. Thus, option E is correct.

Due to the high demand for a given good or service on the market, firms often employ capacity management as a method to maximize production efficiency. Its objectives include locating and resolving manufacturing process bottlenecks and accelerating output through resource optimization and the removal of time and capacity restrictions.

It aids businesses in overcoming difficulties related to creating long-term organizational strategies, managing supply chain operations, and satisfying short- and medium-term client demand. In order to guarantee that it accomplishes the manufacturing output within the allotted time, an organization must analyze the availability of its resources while doing this. In sectors including manufacturing, retail, services, and information technology, this practice is widespread.

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Greater pricing power is most likely to result from greater:A. unused capacity.B. market concentration.C. volatility in market share.

Answers

Answer:

B. market concentration

Explanation:

The answer is that greater pricing power is most likely to result from greater market concentration because this means that there are few competitors in the market which allows to have more power to establish prices.

The other options are not right because unused capacity indicates that there is a lot of competition in the market which doesn't allow to have the power to establish prices and volatility in market share means that there is not a  firm position in the market that allows to have greater pricing power.

Last year, you purchased a stock at a price of $78.00 a share. Over the course of the year, you received $2.70 per share in dividends and inflation averaged 3.2 percent. Today, you sold your shares for $82.20 a share. What is your approximate real rate of return on this investment?

Answers

Answer:

5.65%

Explanation:

Last year a stock of $78.00 was bought

During the period of one year $2.70 was received in dividend and inflation averaged 3.2%

Today the shares was sold for $82.20

The first step is to calculate the nominal return

= ($82.20-$78.00+$2.70)/$78.00

= 6.9/78

= 0.0885×100

= 8.85%

Therefore, the approximate real rate can be calculated as follows

= 8.85%-3.2%

= 5.65%

Hence the approximate real rate of return on this investment is 5.65%

Solve the consumer’s problem for John’s optimal demand for Germ-X and Purell. (You should find actual numbers representing the quantity of Germ-X chosen and the quantity of

Answers

Answer:

Hello your question is incomplete below is the missing part and the needed diagram

suppose John is shopping and has $20 to spend on hand sanitizer. He can go with Germ-X (G) at $1 per fluid ounce (pG=1), or he can purchase purell (P) at $1.25 per fluid ounce (Pp=1.25). His utility function for the two different hand sanitizers is as follows:

U = G +1.1P

where G and P are measured in fluid ounces.

Solve the consumer’s problem for John’s optimal demand for Germ-X and Purell. (You should find actual numbers representing the quantity of Germ-X chosen and the quantity of purell chosen

ANSWER:  The solution =  (Germ-x,Purell ) = (20,0).

Explanation:

The consumers problem for John's optimal demand for Germ-x  and Purell as seen in the diagram can solved by John going maximizing his utility given the constraint of the budget,

that means that John will purchase/spend the constrained budget of ($20) on Germ-x  since the unit price of Germ X is at $1 while Purell's unit price is at $1.25 per fluid ounce

Ball Bearings, Inc., faces costs of production as follows:Quantity Total Fixed Costs (Dollars) Total Variable Costs (Dollars)0 100 01 100 502 100 703 100 904 100 1405 100 2006 100 360(a.) Complete the following table by calculating the company's total cost, marginal cost, average fixed cost, average variable cost, and average total cost at each level of production.
(b.) The price of a case of ball bearings is $50. Seeing that he can't make a profit, the company's chief executive officer (CEO) decides to shut down operations.The firm's profit in this case is...(c.) True or False: This was a wise decision.(d.) Vaguely remembering his introductory economics course, the company's chief financial officer tells the CEO it is better to produce 1 case of ball bearings, because marginal revenue equals marginal cost at that quantity.At this level of production, the firm's profit is...True or False: This is the best decision the firm can make.

Answers

Answer:

Ball Bearings, Inc.

a) Calculations of Costs of Production:

Qty Total Fixed   Total       Total    Marginal  Average  Average   Average

       Costs ($)  Variable  Costs ($) Costs ($)   Fixed      Variable     Total

                        Costs ($)                                Costs ($)  Costs ($) Costs ($)

 0      100             0            100         100          100              0            100

 1       100           50            150         50           100             50           150

2       100           70            170          20            50             35            85

3       100           90           190          20            33              30            63

4       100          140          240          50            25              35           60

5       100         200         300          60             20             40            60

6       100         360         460         160             17              60             77

b)  For the first ball bearings, the profit in this case is a loss of $100 (Revenue - Total costs; $150 - 50).

c) False

d) At this level of production, the firm's profit, is a loss of $100.  This is the best decision the firm can make: False.

Explanation:

a) Data:

Costs of production as follows:

Quantity   Total Fixed Costs ($) Total  Variable Costs ($)

   0                        100                                   0

   1                         100                                 50

  2                         100                                 70

  3                         100                                 90

  4                         100                                140

  5                         100                              200

  6                         100                              360

a) Ball Bearings, Inc. can become profitable when the total revenue exceeds the total costs (variable and fixed).  Ball's marginal cost is the additional cost that the corporation incurs for producing one additional unit of ball bearings.  Its average fixed, variable, and total costs are computed by dividing the total fixed, variable, and total costs by the number of ball bearings produced.

Two mutually exclusive projects have an initial cost of $60,000 each. Project A produces cash inflows of $30,000, $37,000, and $20,000 for Years 1 through 3, respectively. Project B produces cash inflow of $80,000 in Year 2 only. The required rate of return is 10 percent for Project A and 11 percent for Project B. Which project(s) should be accepted and why

Answers

Answer:

Project A should be accepted because the NPV is higher. this means that project A is more profitable than project B

Explanation:

Net present value van be used to determine which project should be accepted.

Net present value is the present value of after tax cash flows from an investment less the amount invested.

NPV can be calculated using a financial calculator

For project A :

Cash flow in year 0 = $-60,000

Cash flow in year 1 = $30,000

Cash flow in year 2 = $37,000

Cash flow in year 3 = $20,000

I = 10%

NPV = $12,877.54

For project B :

Cash flow in year 0 = $-60,000

Cash flow in year 1 = $0

Cash flow in year 2 = $80,000

Cash flow in year 3 = $0

I = 11%

NPV = $4,929.79

Project A should be accepted because the NPV is higher. this means that project A is more profitable than project B

To find the NPV 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 of these inventory changes would be accounted for prospectively? Select one: a. FIFO to LIFO, but not LIFO to FIFO b. LIFO to FIFO, but not FIFO to LIFO c. Both FIFO to LIFO and LIFO to FIFO d. Neither FIFO to LIFO nor LIFO to FIFO

Answers

Answer: a. FIFO to LIFO, but not LIFO to FIFO

Explanation:

Well the inventory changes which would likely be accounted for is the FIFO ( first in first out system ) to LIFO ( last in first out system ). But not the LIFO ( last in first out )  to FIFO ( first in first out ). This system are mostly used in sales where for FIFO the first goods to arrive leaves first and for LIFO the opposite of FIFO

The owner of a leased property conveys possession of the property to the tenant providing them with uninterrupted us of the property without interference from the owner. This is known as

Answers

Answer:

Quiet enjoyment

Explanation:

Quiet enjoyment is a clause in lease agreement that provides a guarantee that the tenant will occupy the property in peace without interference from any other claimants or the landlord.

For example this clause protects a tenant from being removed from a property by someone of higher rank or authority like an agent.

The law recognises quiet enjoyment even when it is not stated explicitly in a lease agreement. It is assumed that every tenant has a right to quiet enjoyment

On July 1, 2017, Lopez Company paid $1,400 for six months of insurance coverage. No adjustments have been made to the Prepaid Insurance account, and it is now December 31, 2017. Zim Company has a Supplies account balance of $5,400 on January 1, 2017. During 2017, it purchased $2,200 of supplies. As of December 31, 2017, a supplies inventory shows $900 of supplies available. Prepare the journal entries to reflect expiration of the insurance and correctly report the balance of the Supplies account and the Supplies Expense account as of December 31, 2017.

Answers

Answer:

Lopez Company

the journal entries to record prepaid insurance:

July 1, 2017, 6 months of insurance are prepaid

Dr Prepaid insurance 1,400

    Cr Cash 1,400

the adjusting entry made on December 31 to record insurance expense:

December 31, 2017, insurance expense

Dr Insurance expense 1,400

    Cr prepaid insurance 1,400

Zim Company

supplies account initial balance $5,400

then it purchased $2,200 worth of supplies during the year

final account balance $900

supplies expense = $5,400 + $2,200 - $900 = $6,700

Adjusting journal entry:

December 31, 2017, supplies expense

Dr Supplies expense 6,700

    Cr Supplies 6,700

Ending balances:

Supplies expense account $6,700Supplies account $900

Lindley Corp.'s stock price at the end of last year was $33.50, and its book value per share was $25.00. What was its market/book ratio

Answers

Answer:

1.34

Explanation:

Computation for the market/book ratio

Using this formula

Market/book ratio=Stock price/Book value per share

Let plug in the formula

Market/book ratio=$33.50/$25.00

Market/book ratio=1.34

Therefore the Market/book ratio will be 1.34.

Unemployment numbers drop as more jobless Americans find positions in local businesses. Which determinant of aggregate demand causes the change

Answers

Answer: Consumer Spending

Explanation:

As more Americans find jobs, they will be able to earn an income. As they do so they will be able to spend more on goods and services in the economy thereby increasing Consumption spending which is the largest determinant of Aggregate Demand.

As a result of this increase in Consumption, Aggregate demand will change by increasing as well.

On January 1, 2018, Lizzy's Lemonade issues 5%, 20-year bonds with a face amount of $81,000 for $71,638, priced to yield 6%. Interest is paid semiannually. What amount of interest expense will be recorded on June 30, 2018, the first interest payment date

Answers

Answer:

The amount of $2,149.14 will be recorded on June 30, 2018 , the first interest payment date.

Explanation:

The data below were extracted from the above information

Face amount $81,000

rate 5%

Issue price $71,638

Yield 6%

Since we already know that interest is paid semi annually, then ;

Amount of interest expense will be = issue price × yield

= $71,638 × 6% × 1/2

= $2,149.14

Amount of interest expense is therefore $2,149.14, to be recorded on June 30, 2018, the first interest payment date.

Jim and Kay Ross contributed to the support of their two children, Dale and Kim, and Jim's widowed parent, Grant. During the year, Dale, a 19-year-old full-time college student, earned $5,500 as a babysitter. Kim, a 23-year-old bank teller, earned $12,000. Grant received $5,000 in dividend income and $4,000 in nontaxable Social Security benefits (dividends, but not social security benefits, will be included in Grant's gross income). Kim and Grant currently reside with Jim and Kay. Dale's main place of residence is with Jim and Kay, and he is currently on a temporary absence to attend school. How many dependents can Jim and Kay claim on their joint income tax return?

Answers

Answer: 1 dependent

Explanation:

Only Dale can be claimed as a dependent as he is a qualifying child who is under 24 and is a full time student.

Kim cannot be claimed as a dependent as Kim is above the age of 19. To be a qualifying child for dependency, Kim would have to be less than 19 or less than 24 were Kim a full time student.

Grant also does not qualify as a dependent under the Qualifying relative designation as Grant's gross income of $5,000 exceeds the limit of $4,200 that Grant would have to be making less than in 2019 to be claimed as a qualifying relative.

The ______ rate of interest is the actual rate charged by the supplier and paid by the demander of fund

Answers

Answer:

nominal

Explanation:

There is a nominal rate that is the interest rate stated on a loan without taking into account the inflation or the compounding of interests and a real rate that is the one that is adjusted to reflect the real cost of the loan to the borrower. According to this, the answer is that the nominal rate of interest is the actual rate charged by the supplier and paid by the demander of fund because this is the rate that is stated when taking a loan.

Karya Company produces a handcrafted musical instrument called a gamelan. The gamelans are sold for a unit price of $839 Selected data for the company's operations last year follow: Units in beginning inventory 0 Unit produced 11,000 Units sold 7,000 Variable cost per unit: Direct materials $150 Direct labor $450 Variable manufacturing overhead $47 Variable selling and administrative $19 Fixed costs: Fixed manufacutring overhead $790,000 Fixed selling and administrative $620,000 What are the unit product costs under absorption and variable costing system

Answers

Answer:

Results are below.

Explanation:

Giving the following information:

Unit produced 11,000

Variable cost per unit:

Direct materials $150

Direct labor $450

Variable manufacturing overhead $47

Fixed costs:

Fixed manufacturing overhead $790,000

The absorption costing method includes all costs related to production, both fixed and variable. The unit product cost is calculated using direct material, direct labor, and total unitary manufacturing overhead.

The variable costing method incorporates all variable production costs (direct material, direct labor, and variable overhead).

Variable costing:

Unitary cost= 150 + 450 + 47= $647

Absorption costing:

Unitary fixed overhead= 790,000/11,000= $71.82

Unitary cost= 647 + 71.82= $718.82

Labor productivity growth can be attributed to: a. improvement in technology. b. a decline in university attendance. c. an increase in population growth. d. a decline in the physical capital per worker.

Answers

Answer:

The answer is A. improvement in technology

Explanation:

Labor productivity growth is not relevant to a decline in university attendance.

Applying the Malthusianism theory, an increase in population growth can't lead to labor productivity growth because while that population growth is potentially exponential, the growth of resources is linear.

Finally, the physical capital per worker is the quantity of equipment and input resources that are used to produce output goods and services. It has no direct influence to the labor productivity growth.

Beck Kubiak wishes to purchase new appliances for her home. The total cost for the appliances is $2,900. To finance the purchase, Becky must pay 20% down, with the balance being financed with a 24-month installment loan with an APR of 8.5%. Determine Becky's total finance charge and her monthly payment

Answers

Answer:

total finance charge = $203.08

her monthly payment = $105.13

Explanation:

The Loan amount = Cost of Appliance - Down Payment

                              = $2,900 - ($2,900 × 20%)

                              = $2,320

Change the APR to nominal compounding,

Using a Financial Calculator, this will be :

8.50 % Shift EFF%

12 Shift P/YR

Shift NOM % = 8.19%

Then calculate the monthly payment as follows :

Pv = $2,320

n = 24

p/yr = 12

r = 8.19%

Fv = $0

PMT = ?

Using a Financial Calculator, monthly payment, PMT is $105.13

Total Finance Charge will then be obtained from the amortization schedule from the First Period to the 24th Period and this will be : $203.08.

This year Burchard Company sold 37,000 units of its only product for $16.40 per unit. Manufacturing and selling the product required $122,000 of fixed manufacturing costs and $182,000 of the fixed selling and administrative costs. It?s per unit variable costs follow.

Material $4.20
Direct labor (paid on the basis of completed units) 3.20
Variable overhead costs 0.42
Variable selling and administrative costs 0.22
Next year the company will use new material, which will reduce material costs by 50% and direct labor costs by 50% and will not affect product quality or marketability. Management is considering an increase in the unit selling price to reduce the number of units sold because the factory's output is nearing its annual output capacity of 42,000 units. Two plans are being considered. Under plan 1, the company will keep the selling price at the current level and sell the same volume as last year. This plan will increase income because of the reduced costs of using the new material. Under plan 2, the company will increase the selling price by 20%. This plan will decrease unit sales volume by 5%. Under both plans 1 and 2, the total fixed costs and the variable costs per unit for overhead and for selling and administrative costs will remain the same.

Required:

1. Compute the break-even point in dollar sales for both (a) plan 1 and (b) plan 2.

Per unit Plan 1 Plan 2
Sales
Variable Costs
Material
Direct labor
Variable overhead costs
Variable S&A costs
Total variable costs
Contribution margin
2. Prepare a forecast contribution margin income statement with two columns showing the expected results of plan1 and plan 2. The statements should reports sales, total variable costs, contribution margin, total fixed costs, income before taxes, income taxes (40% rate), and net income.

Answers

Answer:

plan 1:

units sold 37,000

sales price per unit $16.40

materials per unit $2.10

direct labor per unit $1.60

variable overhead costs per unit $0.42

variable selling and administrative costs per unit $0.22

fixed manufacturing $122,000

fixed selling and administrative $182,000

plan 2:

units sold 35,150

sales price per unit $19.68

materials per unit $2.10

direct labor per unit $1.60

variable overhead costs per unit $0.42

variable selling and administrative costs per unit $0.22

fixed manufacturing $122,000

fixed selling and administrative $182,000

1) break even points:

Plan 1 = ($304,000) / ($16.40 - $4.34) = 25,207.30 = 25,208 units

Plan 2 = ($304,000) / ($19.68 - $4.34) = 19,817.47 = 19,818 units

2) contribution income statement

                                                   Plan 1                  Plan 2

Sales revenue                        $606,800           $691,752

Variable costs:

Production costs                     $152,440            $144,818

Selling and adm. costs                $8,140               $7,733

Contribution margin               $446,220          $539,201

Fixed costs:

Manufacturing costs               $122,000          $122,000

Selling and adm. costs           $182,000          $182,000

Income before taxes               $142,220          $235,201

Income taxes                            $56,888            $94,080

Net income                               $85,332              $141,121

a. What were HCA's liabilities-to-assets ratios and times-interest-earned ratios in the years 2005 through 2009?
b. What percentage decline in EBIT could HCA have suffered each year between 2005 and 2009 before the company would have been unable to make interest payments out of operating earnings, where operating earnings is defined as EBIT?
c. How volatile have HCA's cash flows been over the period 2005 - 2009?
d. Calculate HCA's return on invested capital (ROIC) in the years 2005 - 2009.
HCA INC
ANNUAL INCOME STATEMENT
($ MILLIONS, EXCEPT PER SHARE)
Dec09 Dec08 Dec07 Dec06 Dec05
Sales $ 30,052 $ 28,374 $ 26,858 $ 25,477 $ 24,455
Cost of Goods Sold 24,826 24,023 22,480 21,448 20,391
Gross Profit 5,226 4,351 4,378 4,029 4,064
Depreciation 1,425 1,416 1,426 1,391 1,374
Operating Profit 3,801 2,935 2,952 2,638 2,690
Interest Expense 1,987 2,021 2,215 955 655
Non-Operating Income/Expense 188 256 661 179 412
Pretax Income 2,002 1,170 1,398 1,862 2,327
Total Income Taxes 627 268 316 625 725
Minority Interest 321 229 208 201 178
Net Income $ 1,054 $ 673 $ 874 $ 1,036 $ 1,424
ANNUAL BALANCE SHEET
ASSETS Dec09 Dec08 Dec07 Dec06 Dec05
Cash & Equivalents $ 312 $ 465 $ 393 $ 634 $ 336
Net Receivables 3,692 3,780 3,895 3,705 3,332
Inventories 802 737 710 669 616
Other Current Assets 1,771 1,319 1,207 1,070 931
Total Current Assets 6,577 6,301 6,205 6,078 5,215
Gross Plant, Property & Equipment 24,669 23,714 22,579 21,907 20,818
Accumulated Depreciation 13,242 12,185 11,137 10,238 9,439
Net Plant, Property & Equipment 11,427 11,529 11,442 11,669 11,379
Investments at Equity 853 842 688 679 627
Other Investments 1,166 1,422 1,669 1,886 2,134
Intangibles 2,577 2,580 2,629 2,601 2,626
Deferred Charges 418 458 539 614 85
Other Assets 1,113 1,148 853 148 159
TOTAL ASSETS 24,131 24,280 24,025 23,675 22,225
LIABILITIES
Long Term Debt Due In One Year 846 404 308 293 586
Accounts Payable 1,460 1,370 1,370 1,415 1,484
Taxes Payable - 224 190 - -
Accrued Expenses 2,007 1,912 1,981 1,868 1,825
Total Current Liabilities 4,313 3,910 3,849 3,576 3,895
Long Term Debt 24,824 26,585 27,000 28,115 9,889
Deferred Taxes - - - 390 830
Minority Interest 1,008 995 938 907 828
Other Liabilities 2,825 2,890 2,612 1,936 1,920
TOTAL LIABILITIES 32,970 34,380 34,399 34,924 17,362
Preferred Stock 147 155 164 125 -
Common Stock 1 1 1 1 4
Capital Surplus 226 165 112 - -
Retained Earnings (9,213) (10,421) (10,651) (11,375) 4,859
Common Equity (8,986) (10,255) (10,538) (11,374) 4,863
TOTAL EQUITY (8,839) (10,100) (10,374) (11,249) 4,863
TOTAL LIABILITIES & EQUITY $ 24,131 $ 24,280 $ 24,025 $ 23,675 $ 22,225

Answers

Answer:

HCA

a. HCA's Liabilities-to-assets ratios and times-interest-earned ratios in the years 2005 through 2009:

1. Liabilities-to-assets ratios = Total liabilities/Total Assets

                  Dec. 09     Dec. 08    Dec. 07     Dec. 06     Dec. 05

                 136.63%     141.60%    143.18%     147.51%     78.12%

2. Times-interest-earned ratios = EBIT/Interest Expense

                  Dec. 09     Dec. 08      Dec. 07       Dec. 06       Dec. 05

                 1.91 times  1.45 times   1.33 times    2.76 times   4.11 times

b. The percentage decline in EBIT that HCA could have suffered each year between 2005 and 2009 to make it unable to make interest payments out its operating earnings, where operating earnings is defined as EBIT:

                  Dec. 09     Dec. 08      Dec. 07       Dec. 06       Dec. 05

                 191%            145%           133%            276%         411%

c. The volatility of HCA's cash flows over the period 2005 to 2009:

The standard deviation of the cash flows (cash and cash equivalents) is 115, showing that there is so much volatility in the cash flows.

d. HCA's return on invested capital (ROIC) in the years 2005 - 2009:

= Net Income - Dividend / Total Liabilities + Equity x 100

ROIC =                        4.37%      2.77%      3.64%        4.38%     6.41%

Explanation:

a) Data and Calculations:

HCA INC

ANNUAL INCOME STATEMENT

($ MILLIONS, EXCEPT PER SHARE)

                                  Dec. 09    Dec. 08     Dec. 07     Dec. 06     Dec. 05

Sales                         $ 30,052  $ 28,374  $ 26,858   $ 25,477  $ 24,455

Cost of Goods Sold     24,826     24,023     22,480       21,448      20,391

Gross Profit                   5,226         4,351        4,378        4,029       4,064

Depreciation                  1,425          1,416        1,426          1,391         1,374

Operating Profit            3,801         2,935       2,952        2,638       2,690

Interest Expense           1,987         2,021        2,215           955          655

Non-Operating

 Income/Expense           188            256           661             179           412

Pretax Income             2,002           1,170        1,398         1,862       2,327

Total Income Taxes       627            268            316           625          725

Minority Interest            321             229           208           201           178

Net Income             $ 1,054           $ 673       $ 874      $ 1,036    $ 1,424

ANNUAL BALANCE SHEET

ASSETS                   Dec. 09    Dec. 08     Dec. 07     Dec. 06     Dec. 05

Cash & Equivalents  $ 312        $ 465       $ 393       $ 634       $ 336

Net Receivables      3,692         3,780       3,895        3,705       3,332

Inventories                 802            737            710           669          616

Other Current

 Assets                     1,771           1,319        1,207          1,070          931

Total Current

 Assets                   6,577         6,301       6,205         6,078       5,215

Gross Plant, Property

 & Equipment      24,669       23,714     22,579       21,907     20,818

Accumulated

 Depreciation       13,242       12,185        11,137       10,238       9,439

Net Plant, Property

 & Equipment       11,427        11,529      11,442        11,669      11,379

Investments

 at Equity                 853            842         688            679         627

Other Investments 1,166         1,422       1,669         1,886       2,134

Intangibles            2,577        2,580      2,629         2,601      2,626

Deferred Charges   418           458          539             614           85

Other Assets          1,113          1,148          853             148          159

TOTAL ASSETS  24,131      24,280     24,025       23,675    22,225

LIABILITIES

Long Term Debt Due

In One Year          846          404           308             293         586

Accounts

 Payable            1,460         1,370         1,370            1,415       1,484

Taxes Payable      -               224            190                -              -

Accrued

 Expenses      2,007           1,912          1,981           1,868       1,825

Total Current

 Liabilities       4,313           3,910        3,849          3,576      3,895

Long Term

 Debt          24,824        26,585      27,000         28,115      9,889

Deferred Taxes -                  -                -                  390         830

Minority

 Interest       1,008              995          938             907          828

Other

Liabilities    2,825           2,890        2,612          1,936        1,920

TOTAL LIA-

 BILITIES   32,970         34,380     34,399       34,924       17,362

Preferred

 Stock            147                155           164             125                -

Common

 Stock               1                     1                1                 1                4

Capital

 Surplus      226                 165            112                 -                -

Retained

 Earnings (9,213)          (10,421)     (10,651)       (11,375)       4,859

Common

 Equity     (8,986)        (10,255)     (10,538)      (11,374)       4,863

TOTAL

 EQUITY  (8,839)         (10,100)     (10,374)      (11,249)       4,863

TOTAL LIABILITIES &

EQUITY $24,131      $ 24,280  $ 24,025   $ 23,675  $ 22,225

ii) Liabilities-to-assets ratio:

                                  Dec. 09    Dec. 08     Dec. 07     Dec. 06     Dec. 05

Liabilities                    32,970      34,380     34,399       34,924       17,362

Assets                         24,131      24,280     24,025       23,675     22,225

                                 136.63%     141.60%    143.18%     147.51%     78.12%

iii) Times Interest Earned:

Operating Profit           3,801         2,935       2,952        2,638       2,690

Interest Expense          1,987         2,021        2,215           955          655

                                1.91 times   1.45 times 1.33 times  2.76 times 4.11 times

iv) Volatility:  This is the degree of change of the cash flows, showing its tendency to change from one period to the other.  As calculated, the volatility is very high, showing that the cash flows have higher risk of change.  See below:

                                  Dec. 09    Dec. 08     Dec. 07     Dec. 06     Dec. 05

Cash & Equivalents     $ 312      $ 465        $ 393         $ 634       $ 336

Mean = $428

Deviation from mean     -116            37            -35             206          -92

Squared deviation      13,456       1,369         1,225       42,436      8,464

Sum of squared deviation = 66,950

Mean = 13,390

Square root of mean or Standard Deviation = 115

v) Return on Invested Capital = Net Income/Total liabilities + Equity

                               Dec. 09    Dec. 08     Dec. 07     Dec. 06     Dec. 05

Net Income             $ 1,054        $ 673       $ 874      $ 1,036    $ 1,424

TOTAL LIABILITIES &

EQUITY                  $24,131  $ 24,280  $ 24,025   $ 23,675  $ 22,225

ROIC =                        4.37%      2.77%      3.64%        4.38%     6.41%

If an investor buys enough stocks, he or she can, through diversification, eliminate all of the unique risk inherent in owning stocks, but as a general rule it will not be possible to eliminate all systemic risk.
A. True
B. False

Answers

Answer: True

Explanation:

Buying enough negatively correlated stock can indeed help in diversification of a Portfolio and this on its own is very important as it reduces risk. The type of risk that it reduces however is Unsystematic risk. This is the unique risk inherent in owing stocks.

Systematic risk which is also called undiversifiable risk however cannot be so easily eliminated. This risk is inherent in the Market  or the Market segment in question and results from a mix of the Economic, Geo-political and Financial factors in the market. As such, it will not be possible to eliminate all systematic risk.

The 7 percent bonds issued by Modern Kitchens pay interest semiannually, mature in eight years, and have a $1,000 face value. Currently, the bonds sell for $987. What is the yield to maturity? B) 6.92 percent D) 7.22 percent A) 6.97 percent C) 6.88 percent E) 7.43 percent

Answers

Answer:

The answer is D. 7.22 percent

Explanation:

Interest payments are being made semiannually, this means it is being paid twice in a year

N(Number of periods) = 16 periods ( 8 years x 2)

I/Y(Yield to maturity) = ?

PV(present value or market price) = $987

PMT( coupon payment) = $35 ( [7 percent÷ 2] x $1,000)

FV( Future value or par value) = $1,000.

We are using a Financial calculator for this.

N= 16; PV = -987 ; PMT = 35; FV= $1,000; CPT I/Y= 3.61

3.61 percent is the Yield-to-maturity for semiannual

Therefore, the Yield-to-maturity of the bond annually is 7.22 percent (3.61 percent x 2)

Media selection problems can maximize exposure quality and use number of customers reached as a constraint, or maximize the number of customers reached and use exposure quality as a constraint.
A. True
B. False

Answers

True

The answer is true

Media selection problems can maximize exposure quality and use the number of customers reached as a constraint, or maximize the number of customers reached and use exposure quality as a constraint. Thus the statement is True.

What is Media?

Media is referred to as a medium of communication used to exchange information about events happening in the world. This provides information about the issues and challenges rising in the world and creates awareness among the public.

These issues can utilize the number of customers reached as a limitation and can enhance exposure quality by determining how commonly to use each media source. The value of the objective function will be modified by the dual price sum of the restrictions.

Therefore, the statement is True.

Learn more about Media, here:

https://brainly.com/question/14047162

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Delta Insurance Company has a surplus-share treaty with Eversafe Reinsurance. Delta has a retention limit of $200,000, and nine lines of insurance are ceded to Eversafe. How much will Eversafe pay if a $1,600,000 building insured by Delta suffers an 40 precent loss? 1. A) $600,000 2. B) $700,000 3. C) $720,000 4. D) $800,000

Answers

Answer:

Delta is responsible for insuring $200,000 / $1,600,000 = 1/8 of the building

Eversafe is responsible for 1 - 1/8 = 7/8

the loss = $1,600,000 x 40% = $640,000

Delta will pay 1/8 x $640,000 = $80,000

Eversafe will pay $640,000 - $80,000 = $560,000

in order for Eversafe to pay:

$600,000, the total loss = $685,714, or 42.86% of the building$700,000, the total loss = $800,000, or 50% of the building$720,000, the total loss = $822,857, or 51.43% of the building$800,000, the total loss = $914,286, or 57.14% of the building
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