Answer:
net cash used by investing activities = $280,000
Explanation:
Cash flow from Investing Activities :
Proceeds from Sale of Land $120,000
Purchase of Equipment ($315,000)
Proceeds from Sale of debt securities ($85,000)
Net Cash used by Investing activities ($280,000)
therefore,
Wainwright should report as net cash used by investing activities in its 2020 statement of cash flows of $280,000
Select all the correct answers.
Amber is writing to an accountant that she would like to interview to gain information about the career field. What information should she include in her letter?
a request for a list of contacts that she could also interview
a request to meet for 15 minutes to gain firsthand advice
an explanation of why she is leaving her current job
a list of the questions she intends to ask in the interview
a copy of her résumé and cover letter
Answer:
answer from edmentum for you :)
Explanation:
Answer:
b & d
Explanation:
on plato
Read this article describes some of Teddy Roosevelt's contemporaries. In your journal, offer suggestions for at least three more leaders who you believe also reflect the traits of those profiled in this article and explain why
Answer:
1)autocratic leader
2)democratic leader
Explanation:
1- this leader is one who works fast without consulting employees.
2- this leader consults employees and make sure everyone takes par in decision making
sorry only know 2...
Five years ago, Logocom made a $5 million investment in a new high-temperature material. The product was not well accepted after the first year on the market. However, when it was reintroduced 4 years later, it did sell well during the year. Major research funding to broaden the applications has cost $15 million in year 5. Determine the rate of return for these net cash flows (in $1,000 units).
A firm has just paid its annual dividend of $5.64 a share. Thereafter the dividend is expected to increase at a rate of 2% a year. If the firm's stock currently sells for $60 a share, what is the cost of equity
Answer:
11.588 %
Explanation:
The information available allows us to use the Dividend Growth Model to calculate the cost of equity as :
Cost of equity = Expected dividend ÷ Price per share + growth rate
therefore,
Cost of equity = ($5.64 x 1.02) / $60 + 2 %
= 11.588 %
RKJ Company has provided the following information: 100,000 shares of $5 par value common stock are authorized 64,000 shares have been issued 59,000 shares are outstanding The 64,000 shares of issued common stock were issued for $10 per share. Which of the following statements is correct?
a. Common stock is reported at $630,000 on the balance sheet.
b. Additional paid-in capital is reported at $260,000 on the balance sheet.
c. Common stock is reported at $350,000 on the balance sheet.
d. Treasury stock is reported at $45,000 on the balance sheet.
Answer:
$320,000
Explanation:
The computation is shown below:
= Issued shares of the common stock × par value per share
= 64,000 shares × $5
= $320,000
This $320,000 should be reported in the equity section of the balance sheet
Hence, this is the answer but the same is not provided in the given options
hence, the same is to be considered and relevant
Suppose the risk-free rate of return is 3.5 percent and the market risk premium is
7 percent. Stock U, which has a beta coefficient equal to 0.9, is currently selling
for $28 per share. The company is expected to grow at a 4 percent rate forever,
and the most recent dividend paid to stockholders was $1.75 per share. Is Stock
U correctly priced? Explain.
Answer:
kaya nyo po iyan
Explanation:
nice habbsjsxgjshsbvda
[The following information applies to the questions displayed below.] University Car Wash built a deluxe car wash across the street from campus. The new machines cost $258,000 including installation. The company estimates that the equipment will have a residual value of $28,500. University Car Wash also estimates it will use the machine for six years or about 12,500 total hours. Actual use per year was as follows: Year Hours Used 1 2,700 2 1,500 3 1,600 4 2,400 5 2,200 6 2,100 Required: 1. Prepare a depreciation schedule for six years using the straight-line method. (Do not round your intermediate calculations.)
Answer:
University Car Wash
Depreciation Schedule
Date Cost of Asset Depreciation Accumulated Net book
Expense Depreciation Value
Year 1 $258,000 $38,250 $38,250 $219,750
Year 2 258,000 38,250 76,500 181,500
Year 3 258,000 38,250 114,750 143,250
Year 4 258,000 38,250 153,000 105,000
Year 5 258,000 38,250 191,250 66,750
Year 6 258,000 38,250 229,500 28,500
Explanation:
a) Data and Calculations:
Cost of the new washing machines = $258,000
Estimated residual value = $28,500
Depreciable amount = $229,500 ($258,000 - $28,500)
Straight-line annual depreciation expense = $38,250 ($229,500/6)
Estimated useful life = 6 years
Usage in hours = 12,500 hours
Actual use per year:
Year Hours Used
1 2,700
2 1,500
3 1,600
4 2,400
5 2,200
6 2,100
Total 12,500
At the beginning of year 1, Kare Company initiated a quality improvement program. Considerable effort was expended over two years to reduce the number of defective units produced. By the end of the second year, reports from the production manager revealed that scrap and rework had both decreased. The president of the company was pleased to hear of the success but wanted some assessment of the financial impact of the improvements. To make this assessment, the following financial data were collected for the two years. Year 1 Year 2 Sales $ 10,000,000 $ 10,000,000 Scrap 400,000 300,000 Rework 600,000 400,000 Product inspection 100,000 125,000 Product warranty 800,000 600,000 Quality training 40,000 80,000 Materials inspection 60,000 40,000 Required: a. Classify the costs as prevention, appraisal, internal failure, and external failure. b-1. Compute total quality cost as a percentage of sales for each of the two years. b-2. By how much has profit increased because of quality improvements between Year 1 and Year 2
Answer:
a. The costs can be classified as follows:
Prevention: Quality training
Appraisal: Product inspection and Material inspection
Internal Failure: Scrap and rework
External Failure: Product Warranty
b-1. We have:
Total quality cost as a percentage of sales for Year 1 = 1.60%
Total quality cost as a percentage of sales for Year 2 = 1.65%
b-2. Profit has increased by $295,000 because of quality improvements between Year 1 and Year 2.
Explanation:
a. Classify the costs as prevention, appraisal, internal failure, and external failure.
The costs can be classified as follows:
Prevention: Quality training
Appraisal: Product inspection and Material inspection
Internal Failure: Scrap and rework
External Failure: Product Warranty
b-1. Compute total quality cost as a percentage of sales for each of the two years.
Total quality cost as a percentage of sales = ((Product inspection + Material inspection) / Sales) * 100 ………………. (1)
Using equation (1), we have:
Total quality cost as a percentage of sales for Year 1 = (($100,000 + $60,000) / 10,000,000) * 100 = 1.60%
Total quality cost as a percentage of sales for Year 2 = (($125,000 + $40,000) / 10,000,000) * 100 = 1.65%
b-2. By how much has profit increased because of quality improvements between Year 1 and Year 2?
To calculate the profit associated to quality, only costs associated to quality are deducted from Sales as follows:
Profit associated to quality = Sales - Scrap - Rework - Product inspection - Materials inspection ……… (1)
Using equation (1), we have:
Profit associated to quality for Year 1 = $10,000,000 - $400,000 - $600,000 - $100,000 - $60,000 = $8,840,000
Profit associated to quality for Year 2 = $10,000,000 - $300,000 - $400,000 - $125,000 - $40,000 = $9,135,000
Therefore, we have:
Increase in profit because of quality improvements = Profit associated to quality for Year 2 - Profit associated to quality for Year 1 = $9,135,000 - $8,840,000 = $295,000
Therefore, profit has increased by $295,000 because of quality improvements between Year 1 and Year 2.
, determining whether an organization has fulfilled a certain objective is most closely associated with which of the following management functions
Explanation:
Beureacracy functions
In this type of functions there is institutions that governs what each one does and also the laws and orders are followed to maintain a higher productivity
2. PC Calculators sell calculators that it purchases for $15 each. It costs PC $60 each time calculators are ordered, and carrying costs are 20% of the calculator's purchase price. Annual demand is 100,000 calculators. (a) Compute the EOQ. (b) Compute the inventory costs if PC orders are at (i) the EOQ amount, (ii) 1000 calculators, (iii) 2500 calculators.
Answer: See explanation
Explanation:
The following can be deduced from the question:
Purchase price = $15,
Ordering cost = $60
Carrying cost = 20 % × $15 = $3
(a) The EOQ (economic order quantity) goes thus:
= ✓(2 × Annual demand × ordering cost / carrying cost )
= ✓(2 × 100000 × 60 / 3)
= ✓(12000000 / 3)
= ✓(4000000)
EOQ = 2000 calculators
b. The inventory cost when PC orders are at the EOQ amount goes thus:
Note that:
Inventory cost = Cost of purchase + Ordering cost + Carrying cost
Cost of purchase = $2000 × $15 = $30000
Ordering cost = 100000 / 2000 × 60 = $3000
Carrying cost = 20% × purchase price = 20% × $30000 = $6000
Then, the total cost will be:
= $30000 + $3000 + $6000
= $39000
b. Inventory cost at 1000 calculators will be:
Purchase cost = $1000 × $15 = $15000
Ordering Cost = Annual demand / Ordering quantity × cost of placing the order
= 100000 / 1000 × 60
= $6000
Carrying cost = 20% × $15000 = $3000
Then, the total inventory cost will be:
= $15000 + $6000 + $3000
= $24000
(iii) Inventory cost at 2500 calculators will be:
Purchase cost = 2500 × purchase price = $2500 × $15
= $37500
Ordering Cost of order = 100000 / 2500 × 60
= $2400
Carrying cost = 20% × $37500 = $7500
Total inventory cost:
= $37500 + $2400 + $7500
= $47400
g Last year Lexington had sales of $884,000 and paid taxes of $50,000. Because of the low interest rate environment, the firm also borrowed some money from the local bank and paid $36,000 in interest expense. In addition, the firm incurred Variable Costs and Fixed Costs of $447,000 and $400,000 respectively. If sales increase by 5%, what should be the increase in earnings per share
Answer:
Lexington
The increase in earnings per share is 44.59%.
Explanation:
a) Data and Calculations:
Last Year 5% increase
Sales revenue $884,000 $928,200
Variable costs 447,000 469,350
Contribution $437,000 $458,850
Fixed costs 400,000 400,000
Operating income $37,000 $58,850
Interest expense 36,000 36,000
Income before tax 1,000 22,850
Income taxes 50,000 50,000
Net loss $49,000 $27,150
Increase = 44.59% ($21,850/$49,000 * 100)
Exercise 12-1 Payback Method [LO12-1] The management of Unter Corporation, an architectural design firm, is considering an investment with the following cash flows: Year Investment Cash Inflow 1 $ 15,000 $ 1,000 2 $ 8,000 $ 2,000 3 $ 2,500 4 $ 4,000 5 $ 5,000 6 $ 6,000 7 $ 5,000 8 $ 4,000 9 $ 3,000 10 $ 2,000 Required: 1. Determine the payback period of the investment. 2. Would the payback period be affected if the cash inflow in
Question Completion:
Requirement #2 would the payback period be affected if the cash inflow in the last year were several times as large
Answer:
Unter Corporation
1. Payback period of the investment is:
= 7 years.
2. No. The payback period would not be affected if the cash inflow in the last year were several times as large. The payback period was reached in the 7th year, which is three years before the last year. No cash inflows after the 7th year will have any impact on the payback period.
Explanation:
a) Data and Calculations:
Cash flows:
Year Investment Cash Inflow
1 $ 15,000 $ 1,000
2 $ 8,000 $ 2,000
3 $ 2,500
4 $ 4,000
5 $ 5,000
6 $ 6,000
7 $ 5,000 $25,500
8 $ 4,000
9 $ 3,000
10 $ 2,000
Total $23,000 $34,500
Kuhn does not have any retained earnings available to finance this project, so the firm will have to issue new common stock to help fund it. Its common stock is currently selling for $22.35 per share, and it is expected to pay a dividend of $2.78 at the end of next year. Flotation costs will represent 8% of the funds raised by issuing new common stock. The company is projected to grow at a constant rate of 9.2%, and they face a tax rate of 25%. What will be the WACC for this project
Answer:
The WACC for this project is 22.72%.
Explanation:
P = common stock current selling price per share = $22.35
D1 = Expected dividend next year = $2.78
F = Floating cost = 8%, or 0.08
g = growth rate = 9.2%, or 0.092
t = tax rate = 0.25
r = Ke = cost of equity
The cost of equity can be calculated using the dividend grow model with the consideration of the effect of the issuance or floating cost that reduces cash collected as follows:
P(1 – F) = D1 / (r – g) ….................... (1)
Substituting the relevant value into equation (1) and solve r as follows:
22.35(1 – 0.08) = 2.78 / (r – 0.092)
22.35 * 0.92 = 2.78 / (r – 0.092)
20.562 = 2.78 / (r – 0.092)
20.562 (r – 0.092) = 2.78
20.562r - 1.891704 = 2.78
20.562r = 2.78 + 1.891704
20.562r = 4.671704
r = 4.671704 / 20.562
r = 0.2272, or 22.72%
Since there is no information that shows there is a debt, this implies that WACC is equal to the cost of equity. Therefore, we have:
WACC = r = Ke = 22.72
The annual demand for a product is 14,400 units. The weekly demand is 277 units with a standard deviation of 80 units. The cost to place an order is $28.00, and the time from ordering to receipt is eight weeks. The annual inventory carrying cost is $0.10 per unit. a. Find the reorder point necessary to provide a 95 percent service probability. (Use Excel's NORM.S.INV() function to find the z value. Round z value to 2 decimal places.)
Answer:
2589.56 units
Explanation:
Given that
Annual Demand = 14400 units
Weekly Demand = 277 units
Standard Deviation = 80 units
Ordering cost = $ 28
Lead Time = 8 weeks
Carrying cost = $ 0.10 / unit
Based on the above information
a) For a 95 percent service level, the value of z by referring to the Normal Table in Appendix A) is 1.65
The reorder point is computed as follows:
= Weekly Demand × Lead Time + Z × Standard Deviation × √ Lead Time
=277 × 8 + 1.65 × 80 × √8
= 2216+ 373.56
= 2589.56 units
Hannish Orchards, a juice manufacturer, uses a process that adds all the raw materials at the beginning of the process. Conversion costs are evenly distributed. Assume there are no beginning inventories. During the period the company started making 10,000 gallons. There were 2,000 gallons left in ending WIP that were 40% of the way through the process. Costs incurred during the period were: $ 16,000 Raw materials $ 5,500 Conversion costs The cost assigned to ending work in process would be closest to: A) $3,700 B) $4,300 C) $1,720 D) $1,780
Answer:
a. $3,700
Explanation:
Unit completed = 10000 - 2000 = 8000
Equivalent unit of material = 10000
Equivalent unit of conversion = 8000 + (2000*40%)
Equivalent unit of conversion = 8800
Cost per equivalent unit of material = $16000/10000
Cost per equivalent unit of material = $1.6
Cost per equivalent unit of conversion = $5500/8800
Cost per equivalent unit of conversion = $0.625
Cost of ending WIP = Equivalent unit of material*Unit cost+Equivalent unit of conversion*Unit cost
Cost of ending WIP = 2000*$1.6 + (2000*40%)*$0.625
Cost of ending WIP = $3200 + $500
Cost of ending WIP = $3,700
On January 1, 2020, Indian river groves began construction of a new citrus processing plant. The automated plant was finished and ready for use on September 30, 2021. Expenditures for the construction were as follows:
Jan 1, 2020. $600,000
Sept 1, 2020. $1800,000
Dec 31, 2020 $1800,000
March 31,2021. $1800,000
Aug 31, 2021. $1200,000
Indian river groves borrowed $800,000 at 10% interest rate from a bank on Jan 1, 2020 specifically to finance this construction. In addition, it as has two other debt outstanding throughout the entire construction. A) $1500,000, 8%, 10 years bonds payable and B) $3,200,000, 10%, 5 years note payable. Fiscal year-end is Dec 31.
Instruction:
A. What are the weighted-average accumulated expenditures for 2020 and 2021, respectively?
B. How much interest should be capitalized in 2020? Show your calculation.
The following chart represents the cost of producing different amounts of pizza pies in an hour. Quantity of Output1020405070 Workers (L) 2.253.004.105.506.75 Wage Rate per hour$35.00$35.00 $35.00$35.00$35.00 Calculate the cost of producing 40 pizza pies. Round your answer to the nearest hundredths place.
Answer:
the cost would be $143.50
Explanation:
The computation of the cost of producing 40 pizza pies is shown below:
Cost = no of workers × wage rate per hour
= 4.10 × $35
= $143.50
We simply multiplied the number of workers with the wage rate per hour so that the cost of generating 40 pizza pies could come
hence, the cost would be $143.50
The same would be considered
Pierre, a cash basis, unmarried taxpayer, had $1,700 of state income tax withheld during 2020. Also in 2020, Pierre paid $425 that was due when he filed his 2019 state income tax return and made estimated payments of $1,190 towards his 2020 state income tax liability. When Pierre files his 2020 Federal income tax return in April 2021, he elects to itemize deductions, which amount to $17,450, including the state income tax payments and withholdings, all of which reduce his taxable income. a. What is Pierre's 2020 state income tax deduction
Answer:
$3,315
Explanation:
Calculation to determine Pierre's 2020 state income tax deduction
Using this formula.
2020 state income tax deduction=State income tax withheld+State income tax return amount due+State income tax liability
Let plug in the formula
2020 state income tax deduction=$1700+$425+$1190
2020 state income tax deduction=$3,315
Therefore Pierre's 2020 state income tax deduction is $3,315
Boxer Industries worked on four jobs during its first year of operation: nos. 401, 402, 403, and 404. A review of job no. 403's cost record revealed direct material charges of $75,000 and total manufacturing costs of $93,500. If Boxer applies overhead at 150% of direct labor cost, the overhead applied to job no. 403 must have been:____.
A. $0.
B. $6,000.
C. $4,000.
D. $3,333.
E. $5,000.
Answer:
Its c
Explanation:
NASAA's Model Rule on Unethical Business Practices of Investment Advisers, Investment Adviser Representatives, and Federal Covered Advisers deems all of the following as unethical practices for investment advisers EXCEPT A) inability or unwillingness to disclose sources of additional fees received from those other than the customer in connection with providing advisory services to that client B) performing the initial trades in a new discretionary account with oral authorization C) charging advisory fees that are significantly higher than those charged by other advisers for similar services in that state D) recommending a security based on a rumor
You're a web developer for an online furniture retailer, and you've been having a debate with your boss, the marketing director. She's rejecting your proposal to invite customers' product ratings and reviews on the website because she's concerned that negative comments might discourage sales. You argue that customer feedback would enhance the ________ aspect of your customers' shopping experience.
Answer:
it will enhance the business aspect
Imagine that two goods are available to you: servants (X) and robots (Y). You like servants three times as much as robots. If your domestic help budget is $4,000 per month, the price (wage) of servants is $1500 per person per month, and the price (rent) of robots is $400 per unit per month, what is the value of the MktRS (market rate of substitution)
Answer: 3
Explanation:
The marginal rate of substitution simply means the rate at which one good will be exchanged for another good based on the current market price.
Since you like servants three times as much as robots, this implies that the utility that one gets from one servant is exactly like the utility that will be gotten from three robots.
Therefore, the utility function will be:
U = 3X + Y
Then, the marginal rate of substitution will be:
= MUX/MUY
= 3
frocks and gowns incorporated has two divisions day wear and night wear the day wear division has an investment base of 880,000 and produces and sells 134,500 units of collars at a market price of 12.20 wants to purchase 27,000 units of collars from the day wear division. what is the minimum transfer price that the day wear division would accept for the 27,000 unit order from the night wear
Question
Frocks and gowns incorporated has two divisions day wear and night wear the day wear division has an investment base of $880,000 and produces (and sells) 134,,500 units of Collars at a market price of $12.20 per unit. Variable costs total $7.80 per unit, and fixed charges are $3.90 per unit (based on a capacity of 140,000 units). The Night Wear Division wants to purchase 27,000 units of Collars from The Day Wear Division. However, the Night Wear Division is only willing to pay $8.45 per unit.
What is the contribution margin for the Day Wear Division without the transfer to the Night Wear Division?
Answer:
The minimum transfer value = $305,200
Explanation:
The company current has an excess capacity of 140,000-134,500=5,500 units
These available quantities can sold at a minimum transfer price of $7.80.
However, the balance of 21,500 (i.e 27,000 minus 5,500) should be transferred at the market price of $12.20. This is so because there is an opportunity cost attached to units supplied which is the contribution to be earned if sold at the market price.
Hence, The 27,000 units should transferred at the value computed below:
$
First 5,500= $5,500× $7.80= 42,900
The balance of 21,500 × $12.20= 262,300
The total value 305,200
The minimum transfer value = $305,200
On January 1, 2019, QRS Company granted 80,000 stock options to certain executives. The options may be exercised on or after December 31, 2022, and expire on January 1, 2026. Each option can be exercised to acquire one share of $1 par common stock for $5. The fair value of each options was estimated to be $3 on the grant date. What amount should QRS recognize as compensation expense for 2020
Answer:
The amount QRS should recognize as compensation expense for 2020 is $80,000.
Explanation:
NS = Number of shares granted as stock option = 80,000
FV = Fair value of the options on the date of grant = $3
N = Number of years from December 31, 2022 to January 1, 2026 = 3
Therefore, we have:
Total compensation expenses = NS * FV = 80,000 * $3 = $240,000
Amount QRS should recognize as compensation expense for 2020 = Total compensation expenses / n = $240,000 / 3 = $80,000
When history of management is traced back ?
A 5000Bc
B 2900 Bc
C 5100Bc
D 6100Bc
When history of management is traced back ?
A 5000Bc
B 2900 Bc ✔
C 5100Bc
D 6100Bc
Rommer Company purchases Daley Inc. for $4,700,000 cash on January 1, 2020. The book value of Daley Company's net assets, as reflected on its December 31, 2019 statement of financial position is $4,000,000. An analysis by Rommer on December 31, 2019 indicates that the fair value of Daley's tangible assets exceeded the book value by $525,000, and the fair value of identifiable intangible assets exceeded book value by $150,000. How much goodwill should be recognized by Rommer Company when recording the purchase of Daley Inc.
Answer:
$25,000
Explanation:
Calculation to determine How much goodwill should be recognized by Rommer Company when recording the purchase of Daley Inc.
Using this formula
Goodwill=Beginning cash-Ending book value-Fair value tangible assets-Fair value intangible assets
Let plug in the formula
Goodwill=$4,700,000-$4,000,000-$525,000-$150,000
Goodwill=$25,000
Therefore the goodwill that the company should be recognized by Rommer Company when recording the purchase of Daley Inc. $25,000
Michael Corporation manufactures railroad cars, which is its only product. The standards for the railroad cars are as follows:
Standard tons of direct material (steel) per car 4
Standard cost per ton of steel $ 17.00
During the month of March, the company produced 1,650 cars.
Related production data for the month follows:
Actual materials purchased and used (tons) 6,650
Actual direct materials total cost $ 115,000
What is the direct materials quantity variance for the month?
A) $ 850 favorable
B) $ 850 unfavorable
C) $ 1,950 favorable
D) $ 1,950 unfavorable
Answer:
Direct material quantity variance= $850 unfavorable
Explanation:
Giving the following information:
Standard tons of direct material (steel) per car 4
Standard cost per ton of steel $ 17.00
During March, the company produced 1,650 cars.
Actual materials purchased and used (tons) 6,650
To calculate the direct material quantity variance, we need to use the following formula:
Direct material quantity variance= (standard quantity - actual quantity)*standard price
Direct material quantity variance= (4*1,650 - 6,650)*17
Direct material quantity variance= $850 unfavorable
Which of the following helps make the management process efficient?
Answer:
Explanation:
Efficient processes require constant monitoring and optimization to observe an increase. As the famous management consultant Peter Drucker said, “If you can't measure it, you can't manage it”. Any process you have should be measurable to take action and improve process efficiency.
You are a financial adviser working with a client who wants to retire in eight years. The client has a savings account with a local bank that pays 7% annual interest. The client wants to deposit an amount that will provide her with $1,005,500 when she retires. Currently, she has $302,200 in the account. How much additional money should she deposit now to provide her with $1,005,500 when she retires?
Answer:
$283,005
Explanation:
The computation of the additional money that she deposited now is shown below:
As we know that
Future value = P × FV (7%, 8 Years)
Here
Future value = $1,005,500,
P represent the deposited amount
and FV (7%, 8 Years) is the future value (FV) of $1 at 7% for 8 years. Its value is to be determined from future value table.
From the table, the value of FV (7%, 8 years) is 1.7182.
Now
$1,005,500 = P × 1.7182
P = $1005500 × 1.7182
P = $585205
Now
The Additional deposit amount is
= $585,205 - $302,200
= $283,005
The Iberia Tire Company has 3,000 tires in its inventory which are considered obsolete. Each tire originally cost the company $35 and the normal selling price was $45 per tire. Management is considering two options to reduce these inventory levels. Option one is to sell the tires directly to car dealerships for $30 per tire as opposed to the normal selling price of $45 per tire. The other option is to offer their current customers a $10 per tire rebate on their purchase. In addition to the $10 rebate, the program would cost the company approximately $24,000 to manage. They predict that either option will rid them completely of their excess The decision to sell directly to the car dealerships over offering the rebate will result in:_______
A. A $21,000 increase in profits.
B. A $9,000 increase in profits.
C. A $15,000 decrease in profits.
D. A $24,000 decrease in profits.
Answer:
B. A $9,000 increase in profits
Explanation:
Calculation to determine what The decision to sell directly to the car dealerships over offering the rebate will result in:
First step is to calculate the net selling prices for each group
Car dealership total price of sales = 3000 × 30 Car dealership total price of sales =$90,000
Current customers;
First step is to calculate the price of 1 tire
Price of 1 tire = $45 - $10 rebate
Price of 1 tire = $35
Total selling price = 35 × 3000
Total selling price= $105,000
Second step is to calculate net amount gotten from sales to customers
Net income= $105,000 - $24,000
Net income= $81,000
Now let calculate what the decision to sell directly to the car dealerships over offering the rebate will result in:
Decision to sell = 90,000 - 81,000
Decision to sell= $9,000 increase in profits
Therefore the decision to sell directly to the car dealerships over offering the rebate will result in:$9,000 increase in profits