Answer:
Under this cartel arrangement, they will maximize joint profits if each of the firms produces 257.14 units and sells at $1,542.88 per unit.
Explanation:
p = 3,600 - 4q ..................................................... (1)
C(q_i) = q_i^2 ………………………………… (2)
MC_i = dC(q_i)/dq = 2q_i ……………………. (3)
Since q = q_1 + q_2, we have:
p = 3,600 - 4(q_1 + q_2)
p = 3,600 - 4q_1 - 4q_2 .................................... (4)
For Firm 1:
TR_1 = p * q_1 = (3,600 - 4q_1 - 4q_2)q_1
TR_1 = 3,600q_1 - 4q_1^2 - 4q_2q_1
MR_1 = dTR_1/dq_1 = 3,600 - 8q_1 - 4q_2
From equation (3), MC_1 = 2q_1
Since at the optimum MC_1 = MR_1, we have:
2q_1 = 3,600 - 8q_1 - 4q_2
10q_1 = 3,600 - 4q_2
q_1 = (3,600 - 4q_2)/10
q_1 = 360 - 0.4q_2 .......... (5)
For Firm 2:
TR_2 = p * q_2 = (3,600 - 4q_1 - 4q_2)q_2
TR_2 = 3,600q_2 - 4q_2q_1 - 4q_2^2
MR_2 = dTR_2/dq_2 = 3,600 - 4q_1 - 8q_2
From equation (3), MC_2 = 2q_2
Since at the optimum MC_2 = MR_2, we have:
2q_2 = 3,600 - 4q_1 - 8q_2
10q_2 = 3,600 - 4q_1
q_2 = (3,600 - 4q_1)/10
q_2 = 360 - 0.4q_1 .......... (6)
a. Calculation of Cournot equilibrium quantities
Substituting equation (6) for q_2 into equation (5), we have:
q_1 = 360 - 0.4(360 - 0.4q_1)
q_1 = 360 – 144 + 0.16q_1
q_1(1 – 0.16) = 216
q_1 = 216 / 0.84
q_1 = 257.14 <------------- Cournot equilibrium quantity for firm 1
Substitute for q_1 in equation (6), we have:
q_2 = 360 - 0.4(257.14)
q_2 = 360 – 102.86
q_2 = 257.14 <------------- Cournot equilibrium quantity for firm 2
b. Calculation of Cournot equilibrium price
Substitute for q_1 and q_2 into equation (4), we have:
p = 3,600 – 4(257.14) – 4(257.14)
p = 1,542.88
Therefore, under this cartel arrangement, they will maximize joint profits if each of the firm produces 25.14 and sells at $1,542.88 per unit.
True or False. You should use your net income, or income after taxes have been taken out, to create a more accurate budget.
Answer:
The answer is true Goodluck
Lilian has a degree in computer science and experience in connecting large networks together. What company might be interested in hiring Lilian
Answer:
network companies
Explanation:
since she can connect networks , and would be able to save software data on computers
What are the advantages or disadvantages of creating a hypothesis without adequate research?
Hypothesis can defined as a guess or predicted outcome of a scientific
process.
The advantage of creating a hypothesis without adequate research include
the following:
Complex calculationsAmbiguityThe disadvantage of creating a hypothesis without adequate research
include the following:
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explain demand and supply of money
The money demand curve is downward sloping, i.e., the demand for holding money increases with decrease in interest rates. The short-term interest rate (i) is determined by the equilibrium of the supply and demand for money. If the interest rates are above the equilibrium, there is excess supply of money.
A company has a beta of 2.91. If the market return is expected to be 16% and the risk-free rate is 8%, what is
the company's risk premium?
The additional return investors receive over the risk-free rate in exchange for investing in risky assets is known as the risk premium. The company's risk premium will be 24.90%.
What Are the Components of a Risk Premium?The extra return over the risk-free rate that investors need in order to make up for the increased apprehension associated with hazardous assets is known as the risk premium. Business risk, financial risk, liquidity risk, exchange-rate risk, and country-specific risk are the five key hazards that make up the risk premium.
All five of these risk variables have the potential to lower returns, thus investors must be fairly paid for taking them on. Business risk, financial risk, liquidity risk, exchange-rate risk, and country-specific risk are the five key hazards that make up the risk premium.
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Pepper Department store allocates its service department expenses to its various operating (sales) departments. The following data is available for its service departments:
Expense Basis for allocation Amount
Rent Square feet of floor space $ 30,000
Advertising Amount of dollar sales 36,000
Administrative Number of employees 51,000
The following information is available for its three operating (sales) departments:
Department Square Feet Dollar Sales Number of employees
A 3,200 $ 236,000 5
B 4,800 $ 354,000 7
C 8,000 $ 590,000 8
Totals 16,000 $ 1,180,000 20
What is the total expense allocated to Department B?
6. Suppose that the consensus forecast of security analysts of your favorite company is that earnings next year will be $5.00 per share. The company plows back 50% of its earnings and if the Chief Financial Officer (CFO) estimates that the company's return on equity (ROE) is 16%. Assuming the plowback ratio and the ROE are expected to remain constant forever: Suppose that you are confident that 10% is the required rate of return on the stock. What does the market price of $50.00 per share imply about the market's estimate of the company's expected return on equity? (please give a number) 1 point
10.0000%, market price of $50.00 per share imply about the market's estimate of the company's expected return on equity.
The given amount is;
The market price of $50.00 per share.The company's expected return on equity is 10%.ROE x blowback ratio16.0000% x 50.0000%8.0000%Because the needed rate of return to the stock is 10%, the market's assessment of the company's expected return on equity is greater than that derived using the plowback ratio and the ROE.
As a result, the significance of the market price of $50.00 per share imply about the market's estimate of the company's expected return on equity are the aforementioned.
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Which of the following best illustrates duress? Group of answer choices Bob was to deliver goods worth $500 to Pam on October 1, but failed to do so. Pam tells Bob that unless he pays her $600, which it cost her to obtain goods from another supplier, she will sue him in court. Diana, a real estate agent, brings her car in for repair at Eric's Auto Repair. After examining the car, Eric gives Diana a $500 estimate for the work to be done. Diana needs her car to do her job, so she reluctantly agrees to the repairs. Len has contracted to sell goods to Mel. Knowing that Mel needs the goods to be delivered on a specific date, Len threatens to withhold delivery on that date unless Mel agrees to pay a higher price. Bill persuades his elderly mother to withdraw her life savings from the bank and make an interest-free loan to him.
Answer:
Len has contracted to sell goods to Mel. Knowing that Mel needs the goods to be delivered on a specific date, Len threatens to withhold delivery on that date unless Mel agrees to pay a higher price.
Explanation:
Duress is when a person enters into an agreement due to threats
Mel had to agree to Len's terms because he threatened to withhold her goods which she needed
Anastasia is a principal who is responsible for telling one of her teachers that the school will be cutting her Spanish program in the fall. She has been friends with this teacher for years and knows that the teacher will be very upset. What is the most appropriate communication channel for Anastasia to choose to share this news with the teacher in this scenario?
Question 2 options:
She should send the teacher a formal, typed letter.
She should talk to the teacher face-to-face.
She should send the teacher a text message.
She should post the news on the school website.
Answer she should talk to her face to face
Explanation:
if she respects this woman that is the best way to keep it
6. Comparative advantage is when A. B. C. D.
A. one person can produce more of a good than another person.
B. one person can produce a good at a lower opportunity cost than another person.
C. Two parties can complete a task equally well.
D. one person can produce a good at a higher opportunity cost than another person.
B. one person can produce a good at a lower opportunity cost than another person.
Comparative advantage is a concept in economics that refers to the ability of a person, firm, or country to produce a good or service at a lower opportunity cost than another. Opportunity cost is the cost of forgoing an alternative opportunity in order to pursue a particular action. Hence, the correct option will be B: one person can produce a good at a lower opportunity cost than another person.
For example, let's say Person A can produce 10 units of product X or 5 units of product Y in one hour, while Person B can produce 8 units of product X or 4 units of product Y in one hour. Person A has an absolute advantage in producing both X and Y, as they can produce more of each product than Person B. However, Person B has a comparative advantage in producing product Y, as they can produce it at a lower opportunity cost than Person A, since they have to give up less of their production of product X to produce product Y.
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Who is sign a contract for the sale of real estate means to what?
refers to everything your customer see when interacting thing with your business.
Answer:
feedback on customer service
Mr Ashok has a company, and has an option to issue different types of preference shares. State all the types preference shares a company can issue.
What competition and Five Force Model Analysis?
Answer:
Porter's Five Forces is a framework for analyzing a company's competitive environment. The number and power of a company's competitive rivals, potential new market entrants, suppliers, customers, and substitute products influence a company's profitability.
A free enterprise system provides individuals the opportunity to make their own economic decisions, without restrictions from the government. It allows the supply and demand of consumers to determine the success or failure of an economic endeavor. As a result, some business owners have become successful, while others have not.
In an essay, you will choose an entrepreneur and argue whether the free enterprise system was necessary for that individual to make an impact on the business world.
The entrepreneur that is chosen for this argument is Steve Jobs. Steve Jobs was one of the co-founders of Apple, which is now a trillion-dollar company.
The free enterprise system was necessary for Steve Jobs to make an impact on the business world. Steve Jobs did not come from a wealthy background, but he had a passion for technology. The free enterprise system allowed him to start a business without any restrictions from the government.
He was able to create innovative products, such as the iPhone and iPad, and sell them to consumers. The supply and demand of consumers determined the success or failure of his business endeavors. Steve Jobs was able to create a successful company and become a billionaire because of the free enterprise system.
Without the free enterprise system, Steve Jobs may not have been able to start a successful business and make an impact on the business world.
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3. How did followers in this case act in ways that contribute to the power of destructive leaders and their goals? What was the debilitating impact their actions had on the organizations?
The followers in the Penn State Sexual Abuse Scandal acted in ways that contributed to the power of the destructive leader and his goals.
How did followers contributed to power of the destructive leader?Jerry Sandusky was convicted of sexually abusing multiple young boys over a period of several years which has erupted following Sandusky's arrest revealed a pattern of behavior in which followers including university officials and members of the football program.
This rruption enabled Sandusky's abusive behavior by ignoring or covering up reports of misconduct. In some cases, individuals who spoke out against Sandusky's behavior were ostracized or punished for challenging the status quo. This pattern of behavior allowed Sandusky to continue his abuse unchecked and contributed to the power he held over those around him.
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external opportunities of a pharmacy business
The pharmacy sector is India's most profitable and fastest growing business sector. There are numerous business opportunities to begin in this sector.
Here are four areas of your pharmacy business that you might want to concentrate on, along with some resources to help you get started.
1.Profitability
2.Customer Contentment
3.Services
4.Leadership
There are many profitable segments available in the pharma sector, but the main issue is that people are not fully aware of these segments. Whether they come from a pharmacy background or not, they frequently struggle to find where to invest their hard core money or how to get started. Here we will discuss some important businesses in the pharmacy sector that will be beneficial to your business career.
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Which feature is a point of differentiation between products and services
Answer:
Products are tangible, offered by the companies to the customers in exchange for money.
Services are the intangible economic product that is provided by a person on the other person’s demand. It is an activity carried out for someone else.
Explanation:
Westco Company issued 14-year bonds a year ago at a coupon rate of 8 percent. The bonds make semiannual payments and have a par value of $1,000. If the YTM on these bonds is 6.3 percent, what is the current bond price in dollars?
The current bond price in dollars is approximately $1,137.49.
To calculate the current bond price, we can use the present value of the bond's cash flows. Since the bond has a 14-year maturity and makes semiannual payments, it will have a total of 28 (14 years multiplied by 2) coupon payments.
The coupon rate is 8 percent, which means the bond pays $80 (8 percent of $1,000) in interest annually, or $40 per semiannual period. The bond also returns the face value of $1,000 at maturity.
To calculate the present value of the bond's cash flows, we discount each cash flow to its present value using the yield to maturity (YTM) of 6.3 percent. The YTM represents the market's required rate of return for the bond.
Using a financial calculator or spreadsheet software, we can discount each cash flow and sum them up to find the current bond price. The formula to calculate the present value of a bond's cash flows is:
PV = C * (1 - (1 + r)^(-n)) / r + F / (1 + r)^n
Where PV is the present value, C is the coupon payment, r is the YTM per period, n is the total number of periods, and F is the face value.
Plugging in the values for the given bond, we have:
C = $40
r = 6.3% / 2 = 0.0315 (semiannual YTM)
n = 28
F = $1,000
Using the formula and calculating the present value, we find that the current bond price is approximately $1,137.49.
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in the net advantage to leasing calculation, all cash flows (except salvage value) are discounted at the firm'
In the net advantage to leasing calculation, all cash flows (except salvage value) are discounted at the firm's after-tax marginal cost of borrowing.
A cash flow is a physical or virtual movement of money: in its most basic form, a cash flow is a payment (in a currency), often from one central bank account to another.
The phrase 'cash flow' is most commonly used to represent payments that are projected to occur in the future, are hence unknown, and must thus be forecasted using cash flows. However, it is common to use cash flow in a broader meaning to describe (symbolic) payments into or out of a firm, project, or financial instrument.
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Which scenario describes the highest level of productivity?
A. Producing 50 chairs using resources that cost $400
B. Producing 15 chairs using resources that cost $150
C. Producing 5 chairs using resources that cost $100
D. Producing 100 chairs using resources that cost $200
The scenario that describes the highest level of productivity is option D. Producing 5 chairs using resources that cost $100. Calculating the highest productivity:
For A. The cost should be $400 for 50 chairs so per chair should be = $400 ÷ 50 = 8. For B. The cost should be $150 for 15 chairs so per chair should be = $150 ÷ 15 = 10. For C. The cost should be $100 for 5 chairs so per chair should be = $100 ÷ 5 = 20. and For D. The cost should be $200 for 100 chairs so per chair should be = $200 ÷ 100 = 2
What is productivity?Productivity is the efficiency of production of goods or services expressed by some measure. Measurements of productivity are often expressed as a ratio of an aggregate output to a single input or an aggregate input used in a production process, i.e. output per unit of input, typically over a specific period of time.
Therefore, the correct answer is option D.
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Propose your top three potential social causes for your organization and why your selected social cause or issue is a good match with your chosen corporation for creating a corporate social responsibility (CSR) campaign.
By selecting a social cause that aligns with their values and corporate goals, companies can create a CSR campaign that resonates with stakeholders and helps to build a positive reputation for their brand.
There are various social causes that companies may choose to support, depending on their corporate social responsibility goals. Here are the top three social causes that I would recommend for an organization, along with reasons why they are good matches for creating a CSR campaign:1. Environmental conservation: Protecting the environment and promoting sustainable practices is a social cause that has gained widespread attention in recent years.
As climate change continues to be a pressing issue, businesses that take a proactive approach to reducing their carbon footprint can establish themselves as responsible and sustainable entities. This is a good match for companies that have a large environmental impact, such as those in the manufacturing or transportation sectors. A CSR campaign focused on environmental conservation can include initiatives such as reducing waste, using renewable energy sources, and promoting eco-friendly practices among employees and customers.
2. Education: Investing in education is one of the most effective ways to support social development and empower individuals and communities. For companies that want to create a CSR campaign that has a tangible impact on people's lives, education is a great choice. This is especially relevant for companies that have a strong local presence and want to support the communities in which they operate. A CSR campaign focused on education can include initiatives such as donating educational resources to schools, providing scholarships to students, or organizing workshops and training programs for employees and community members.
3. Health and wellness: Promoting health and wellness is a social cause that has become increasingly relevant in light of the COVID-19 pandemic. Companies that prioritize the well-being of their employees and customers can create a positive image for themselves and build strong relationships with stakeholders. This is a good match for companies in the healthcare or hospitality sectors, as well as those that offer wellness-related products or services.
A CSR campaign focused on health and wellness can include initiatives such as promoting healthy lifestyles, providing access to healthcare services, or supporting mental health awareness and treatment programs.Overall, each of these social causes has the potential to create a meaningful and lasting impact, both for the company and the communities it serves.
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HELPED NEEDED !
David’s company has production plants set up in almost 20 countries. However, his company is experiencing low demand and its total exports are decreasing. Moreover, due to strong competition, David’s company has resorted to intensive marketing strategies. This focus has led to an increase in marketing costs. In which phase of the product cycle is David’s company?
A.
introduction
B.
decline
C.
maturity
D.
growth
Answer:
B. Decline
He has scaled his business, and the years have caused damage to his overall products hence the business is in decline.
What is the payback period of a project?
What are two cons of using a credit card?
You are a mid-level manager at a water distillation and filtration plant that provides five gallon bottles of water to consumers and businesses. Your organization produces three types of water that are marketed:
Distilled bottles (7$/bottle) that are typically used by businesses in the medical and chemical industries
Spring bottles (5$/bottle) that are typically used by consumer households
Artesian bottles (10$/bottle) that are typically used by high-end hospitality businesses
Unfortunately, your production plant suffered a mechanical breakdown. One of the lines is not operational, and therefore one of the specific types of water will not be produced for one month. Recognizing that it is off-season for tourists in your region, your direct manager has decided to stop production of Artesian water. You are tasked with emailing your largest hospitality client, Golden Mango Resort. You must inform them that you will not be able to provide their Artesian water order. It is possible that you may substitute their ordered water for another type of water. How are you going to deliver the bad news?
The appropriate way to inform the hotel about the breakdown situation of the production plant and the proposal to solve the problem caused to the hotel is by means of a letter in formal and proactive language.
What is a letter?A letter is a term to refer to a means of written communication through which we can send a message to another person. Letters were a means of communication used for much of history. However, in recent years they have been replaced by emails and instant messages.
How to write a formal letter?A formal letter is generally a document that a sender sends to a receiver to formally inform, request or communicate a specific event. Generally, this type of language is used in the workplace between companies, employee - employer, students - teachers, scientists, entrepreneurs or others.
Sample formal letter for Golden Mango ResortSan Francisco, CA. St 7 - 54
October 18, 2022
Margaret Brennan.
Cordial greetings Mrs. Margaret Brennan, I respectfully communicate with you to inform you that in recent days one of our production plants suffered a mechanical breakdown and its repair will take at least a month to return to producing the amount before.
In response to this situation, the directors of our company have made the decision to pause the production of artisanal water bottles that we had been selling to Golden Mango Resort given the low number of tourists in the region. Due to the above, we will not be able to fulfill your request for artisanal water from the last month.
On the other hand, we want to offer you an alternative with our line of spring bottles that are half the value of craft bottles. I apologize in advance for this situation and await your response.
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The brand changes form part of a strategic plan the group conceived in September last year called Ekuseni (the Zulu word for “dawn”)”
“Pick n Pay and its new CEO are taking the fight to competitors in a strategy..”
“Pick n Pay yesterday launched a new strategic plan…”
Evaluate the proposed strategy that Pick n Pay is planning to implement, including in your evaluation, the potential risks attached to the proposed new strategy
Pick n Pay's proposed strategy, known as Ekuseni, aims to implement changes in their brand and take the fight to competitors. The strategy, conceived in September last year, focuses on strategic planning and was launched recently. While the strategy holds potential for success, there are risks associated with its implementation.
1. Pick n Pay's proposed strategy, called Ekuseni, includes changes to their brand and a competitive approach to rivals. This strategic plan was conceived in September last year, with the term Ekuseni referring to "dawn" in Zulu.
2. The strategy aims to revamp the brand image and position Pick n Pay as a strong competitor in the market. By taking the fight to competitors, the company intends to gain a competitive edge and attract more customers.
3. The launch of the new strategic plan indicates that Pick n Pay is committed to implementing this strategy and achieving its goals. It demonstrates the company's intention to adapt and stay relevant in the evolving market.
4. However, like any strategic plan, there are potential risks associated with its implementation. These risks include customer resistance to changes in the brand, increased competition from rivals, and potential financial strains due to the cost of rebranding and marketing efforts.
5. Customer resistance is a common risk when brands undergo significant changes. If the proposed strategy doesn't resonate with Pick n Pay's target market, it could lead to a decline in customer loyalty and affect sales.
6. Additionally, taking the fight to competitors may trigger retaliatory actions from rival companies. This could result in intensified competition, price wars, and potential market share loss for Pick n Pay.
7. Finally, implementing a new strategic plan involves financial investments. The cost of rebranding, marketing campaigns, and operational changes may strain the company's resources, potentially impacting its financial stability.
In conclusion, while Pick n Pay's proposed strategy holds promise for the company's growth and competitiveness, there are risks involved. Proper planning, market research, and effective execution will be crucial to mitigating these risks and ensuring the success of the strategy.
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Marketing managers from two companies agree that competing to offer the lowest prices has been hurting their profit margins, so they agree on the prices they will charge for some of their key products. What illegal pricing behavior is this? O A. Price discrimination O B. Deceptive pricing C. Price fixing O D. Price gouging
Price fixing is the illegal pricing behaviour is this. Hence, option C is correct.
A written, verbal, or conduct-based agreement to raise, lower, maintain, or stabilize prices or price levels is known as price fixing. Antitrust laws typically mandate that each business establish prices and other competitive terms independently, without consulting a rival.
Competitors who agree to raise, cut, or stable prices are said to have engaged in horizontal price fixing. For instance, a horizontal agreement between two rival fast-food establishments selling hamburgers on the sale pricing of cheeseburgers is prohibited by antitrust rules.
Price fixing is an anticompetitive agreement between players on the same side of a market to buy or sell a good, service, or commodity solely at a set price, or to keep the market's dynamics in such a way that the price is kept at a fixed level.
Thus, option C is correct.
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Answer:
price fixing
Explanation:
Precision Systems manufactures CD burners and currently sells 18,500 units annually to producers of laptop computers. Jay Wilson, president of the company, anticipates a 15 percent increase in the cost per unit of direct labor on January 1 of next year. He expects all other costs and expenses to remain unchanged. Wilson has asked you to assist him in developing the information he needs to formulate a reasonable product strategy for next year.
You are satisfied that volume is the primary factor affecting costs and expenses and have separated the semivariable costs into their fixed and variable segments. Beginning and ending inventories remain at a level of 1,000 units. Current plant capacity is 20,000 units. The following are the current-year data assembled for your analysis.
Sales price per unit $100
Variable costs per unit:
Direct materials $10
Direct labor $20
Manufacturing overhead and selling and administrative expenses 30 60
Contribution margin per unit (40%) $40
Fixed costs $390,000
Required:
a. What increase in the selling price is necessary to cover the 15 percent increase in direct labor cost and still maintain the current contribution margin ratio of 40 percent?
b. How many units must be sold to maintain the current operating income of $350,000 if the sales price remains at $100 and the 15 percent wage increase goes into effect?
c. Wilson believes that an additional $700,000 of machinery (to be depreciated at 20 percent annually) will increase present capacity (20,000 units) by 25 percent. If all units produced can be sold at the present price of $100 per unit and the wage increase goes into effect, how would the estimated operating income before capacity is increased compare with the estimated operating income after capacity is increased? Prepare schedules of estimated operating income at full capacity before and after the expansion.
a. An increase of $20 per unit is necessary to cover the 15 percent increase in direct labor cost and maintain the desired contribution margin ratio.
b.The fixed costs and desired operating income remain the same, so the contribution margin per unit of $40 is used. The required sales volume is 18,500 units.
c. The estimated operating income after capacity expansion can be determined by increasing the production and sales volume by 25 percent, i.e., 23,125 units
a. To maintain the current contribution margin ratio of 40 percent, the selling price per unit needs to be increased by 20 percent [(15 percent wage increase) / (current contribution margin ratio)].
Therefore, an increase of $20 per unit is necessary to cover the 15 percent increase in direct labor cost and maintain the desired contribution margin ratio.
b. To maintain the current operating income of $350,000, the number of units that must be sold can be calculated using the contribution margin ratio.
The fixed costs and desired operating income remain the same, so the contribution margin per unit of $40 is used. The formula for calculating the required sales volume is:
(Number of units) = (Fixed costs + Desired operating income) / Contribution margin per unit
Plugging in the values, we have:
(Number of units) = ($390,000 + $350,000) / $40 = 18,500 units
c. Before the capacity expansion, the estimated operating income can be calculated using the current production and sales volume of 18,500 units.
The estimated operating income after capacity expansion can be determined by increasing the production and sales volume by 25 percent, i.e., 23,125 units.
The schedules of estimated operating income at full capacity before and after the expansion can be prepared by multiplying the respective sales volumes with the contribution margin per unit and subtracting the fixed costs and the wage increase.
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PLEASE HELP, WILL GIVE BRAINLIEST
1. The industrial wood planers currently valued at $58,000 each were purchased two years ago for $65,000 each. The company plans to keep them for six more years. Jasmine uses the straight-line method to determine the depreciation for these machines. Be sure to follow FASB
a. What is the salvage value of each planner, and how is this amount determined? (2 points)
The salvage value of each planner is $23,000 and this is derived by first calculating the depreciation amount which is then deducted from Original cost of the asset.
How do we calculate our salvage value?The salvage value of each industrial wood planer is the estimated value of the machine at the end of its useful life, after it has been fully depreciated. It is determined by subtracting the accumulated depreciation from the original cost of the asset.
In Jasmine's case, using the straight-line method of depreciation, the annual depreciation for each machine is calculated as follows:
$65,000 - $58,000 = $7,000 (depreciation per year)
The company plans to keep the machines for six more years, so the total amount of accumulated depreciation would be:
$7,000 x 6 = $42,000
Therefore, the estimated salvage value of each industrial wood planer would be:
= $65,000 - $42,000
= $23,000
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