Answer:
B)the payback period is on a different time frame.
Explanation:
Return on sustainability investment can be regarded as performance measure that is been utilized in evaluation of the gains which is produced due to result of corporate sustainability initiatives as regards amount of money that is invested in those initiatives.
Sustainable return on investment can be regarded as methodology used in identification as well as quantifying of environmental and societal, impacts of investment as regards a projects and initiatives.
It should be noted that The ROI on sustainability efforts can be difficult to quantify because the payback period is on a different time frame.
Coke and Pepsi are examples of
Coke and Pepsi are examples of soft drinks.
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Have a great day!
A date with Alex costs you $100 and gives you an additional 1000 units of utility. A date with Kelly costs you $200 and an additional 4,000 units of utility. Based only on the information you have, using the theory of rational choice, you most likely would:
Answer:
Based only on the information you have, using the theory of rational choice, you most likely would:
O date Kelly.
Explanation:
a) Data and Calculations:
Cost of date with Alex = $100
Marginal utility with Alex = 1,000 units
Marginal utility cost with Alex per unit = $0.10 ($100/1,000)
Cost of date with Kelly = $200
Marginal utility with Kelly = 4,000 units
Marginal utility cost with Kelly per unit = $0.05 ($200/4,000)
b) The theory of rational choice states that individuals are more likely to make choices to satisfy their self-interests and provide them with the greatest benefit. This implies that people weigh their options and make decisions that serve them best.
Discuss various factors that must be considered on the warehouse location decisions?
Answer:
burglar proofing
Explanation:
security
The following is an account for a production department, showing its costs for one month: Work in Process Inventory Beginning Balance5,400Completed and transferred out49,410 Direct materials21,600 Direct labor16,200 Overhead10,800 Ending Balance4,590 Assume that materials are added at the beginning of the production process and that direct labor and overhead are applied uniformly. If the started and completed units cost $41,850, what was the cost of completing the units in the beginning Work in Process inventory
Answer:
$2,160
Explanation:
Total costs = Beginning Balance + Direct materials + Direct labor+ Overhead
Total costs = $5,400 + $21,600 + 16,200 + $10,800
Total costs = $54,000
Total transferred out = Total costs - Ending Balance
Total transferred out = $54,000 - $4,590
Total transferred out = $49,410
BGIP transferred out = Total transferred out - Assumed started and completed units cost
BGIP transferred out = $49,410 - $41,850
BGIP transferred out = $7,560
Cost to complete BGIP = BGIP transferred out - Beginning Balance
Cost to complete BGIP = $7,560 - $5,400
Cost to complete BGIP = $2,160
This Question: 1 pt
The law of demand
shown graphically by a
demand curve
When the price of a good drops, consumers purchase more of it because of
O A. the substitution effect only.
OB. neither the income nor the substitution effect.
O C. the income effect only
OD. both the income and substitution effect.
Click to select your answer
Type here to search
о
Answer:
C. the income effect only
Explanation:
In microeconomics, the income effect is the change in demand for a good or service caused by a change in a consumer's purchasing power resulting from a change in real income. This change can be the result of a rise in wages etc., or because existing income is freed up by a decrease or increase in the price of a good that money is being spent on
Miss Hap, the company bookkeeper, recorded the annual repair costs on the company's machinery as an increase to the Machinery account. As a result, which of the following statements correctly describes this situation?
A. Expenses will be overstated.
B. Liabilities will be overstated.
C. Stockholders' equity will be understated
D. Assets will be overstated.
Answer:
D
Explanation:
Repairs shouldn’t be recorded to the equipment (asset) account but should be recorded as an expense instead.
The language of price controls
Suppose that, in a competitive market without government regulations, the equilibrium price of milk is $2.50 per gallon.
Complete the following table by indicating whether each of the statements is an example of a price ceiling or a price floor and whether it is binding or non-binding.
Statement Price Control Binding or Not
The government prohibits grocery stores from selling
milk for more than $2.30 per gallon.
The government has instituted a legal minimum price
of $2.30 per gallon for milk.
Due to new regulations, grocery stores that would like
to pay better wages in order to hire more workers are
prohibited from doing so.
Answer:
Price ceiling binding
price floor non binding
price ceiling binding
Explanation:
A price floor is when the government or an agency of the government sets the minimum price of a product. A price floor is binding if it is set above equilibrium price.
The minimum price is $2.30 which is less than the equilibrium price of $2.50. Thus, its a non binding price floor
Price ceiling is when the government or an agency of the government sets the maximum price for a product. It is binding when it is set below equilibrium price.
Effects of a binding price ceiling
1. It leads to shortages
2. it leads to the development of black markets
3. it prevents producers from raising price beyond a certain price
4. It lowers the price consumers pay for a product. This increases consumer surplus
the maximum price is 2.30 which is less than the equilibrium price of $2.50. Thus, its a binding price ceiling
XYZ Company estimates the amount of materials handling overhead cost that should be allocated to the company's two products using the data that are given below: Wall Mirrors Specialty Windows Total expected units produced 9,000 6,000 Total expected material moves 400 100 Expected direct labor-hours per unit 7 5 The total materials handling cost for the year is expected to be $6,800. The materials handling cost is allocated based on the number of materials moves. What is the total materials handling cost allocated to the specialty windows
Answer: $2,720
Explanation:
Total materials handling cost for specialty windows = Proportion of total units * Total materials handling cost
Proportion of total units = Specialty units / (Specialty windows + Wall mirrors)
= 6,000 / (6,000 + 9,000)
= 0.4
Total material handling cost for specialty windows = 0.4 * 6,800
= $2,720
giải hộ em câu THUẾ này nói về đúng hay sai và giải thích , đưa ra lời giải giúp em ạ , em cám ơn mọi người ạ
DN nhập một lô hàng với số lượng là 10.000sp A; theo giá FOB cảng nước XK 1usd/sp. chi phí vận tải F và BHQT I phải trả bằng 20% giá nhập của lô hàng. tỷ giá hối đoái tính thuế 20.000 vnđ/usd. Thuế suất TNK 20% (TNK được giảm 20% số thuế phải nộp) , TTTDB 15%, TGTGT 10%. TNK, TGTGT, TTTĐB phải nộp của lô hàng A này lần lược là : 38.400.000 đ; 27.840.000đ; 45.936.000đ.
Explanation:
giải hộ em câu THUẾ này nói về đúng hay sai và giải thích , đưa ra lời giải giúp em ạ , em cám ơn mọi người ạ
DN nhập một lô hàng với số lượng là 10.000sp A; theo giá FOB cảng nước XK 1usd/sp. chi phí vận tải F và BHQT I phải trả bằng 20% giá nhập của lô hàng. tỷ giá hối đoái tính thuế 20.000 vnđ/usd. Thuế suất TNK 20% (TNK được giảm 20% số thuế phải nộp) , TTTDB 15%, TGTGT 10%. TNK, TGTGT, TTTĐB phải nộp của lô hàng A này lần lược là : 38.400.000 đ; 27.840.000đ; 45.936.000đ.
Aztec Inc. produces soft drinks. Mixing is the first department, and its output is measured in gallons. Aztec uses the FIFO method. All manufacturing costs are added uniformly. For July, the mixing department provided the following information:
Production:
Units in process, July 1, 60% complete 18,000 gallons
Units completed and transferred out 141,000 gallons
Units in process, July 31, 45% complete 16,000 gallons
Costs:
Work in process, July 1 $36,000
Costs added during July 398,460
Required:
Prepare a production report.
Answer:
Aztec Inc.
Mixing Department
Production Report
For the month of July
Equivalent units of production:
Beginning work in process 18,000 7,200 (40%)
Units started and completed 139,000 139,000 (100%)
Ending work in process 16,000 7,200 (45%)
Total equivalent units of production 153,400
Cost per equivalent unit:
Costs added during July $398,460
Equivalent units 153,400
Cost per equivalent unit = $2.60 ($398,460/153,400)
Cost to be accounted for:
Work in process, July 1 $36,000
Costs added during July 398,460
Total costs to be accounted for $434,460
Costs assigned:
Beginning work in process = $18,720 (7,200 * $2.60)
Units started and completed = $361,400 (139,000 * $2.60)
Ending work in process = $18,720 (7,200 * $2.60)
Costs assigned to:
Units completed and transferred out:
Beginning work in process costs:
60% completion = $36,000
40% completion = 18,720
Units started and
completed in July = 361,400
Total costs assigned to
units transferred out = $416,120
Cost of ending work in process = 18,720
Total costs assigned = $434,840
Explanation:
a) Data and Calculations:
FIFO Method
Units Degree of Completion
July 1 work in process 18,000 60%
Units transferred out 141,000
July 31 work in process 16,000 45%
Production units available 157,000
Beginning work in process 18,000 40% to be completed
Units started and completed 139,000 100%
The Zeller Corporation's stockholders' equity accounts have the following balances as of December 31, 2016:
Common stock, $10 par (30,000 shares issued and outstanding) $300,000
Additional paid-in capital 2,000,000
Retained earnings 5,700,000
Total stockholders' equity $8,000,000
Refer to above table. On January 2, 2017, the board of directors of Zeller declared a 5% stock dividend to be distributed on January 31, 2017. The market price per share of Zeller's common stock was $30 on January 2 and $32 on January 31. As a result of this stock dividend, the retained earnings account should be decreased by :___________
Answer:
The Zeller Corporation
As a result of this stock dividend, the retained earnings account should be decreased by :___________
$15,000.
Explanation:
a) Data and Calculations:
The Zeller Corporation's stockholders' equity accounts have the following balances as of December 31, 2016:
Common stock, $10 par (30,000 shares issued and outstanding) $300,000
Additional paid-in capital 2,000,000
Retained earnings 5,700,000
Total stockholders' equity $8,000,000
Analysis:
January 2, 2017: Stock dividend $15,000 (30,000 * 5% = 1,500 shares * $10) Stock dividend distributable $15,000
January 31, 2017: Retained Earnings $15,000 Stock Dividend $15,000
Stock dividend distributable $15,000 Common stock $15,000
Marble Books, Inc., is expected to pay an annual dividend of $1.80 per share next year. The required return is 16 percent and the growth rate is 4 percent. What is the expected value of this stock five years from now
Answer:
$18.25
Explanation:
Calculation to determine the expected value of this stock five years from now
Expected value= 2.19/(0.16-0.04)
Expected value= 2.19/0.12
Expected value =$18.25
Therefore the expected value of this stock five years from now is $18.25
Vera PLC uses exponential smoothing with trend to forecast monthly sales. At the end of September, Small Industries PLC hopes to forecast sales for October. The trend through August has been 500 additional unit sales per month (Tt-1). Average sales have been 1800 units per month (St-1). The demand for September was 1780 units (AL). Vera PLC uses alpha (a) - 0.2 and Beta (B)-0.3. Note: This Forecasting Question relates to Questions 65-67. Following the first stage of the trend-adjusted exponential smoothing method, smooth the level of the series and calculate St for Vera PLC. (retain your answer and calculation for:________
a) 1985
b) 2563
c) 2196
d) 2144
e) 2373
Answer:
Option c (2196) is the right solution.
Explanation:
Given:
[tex]\alpha = 0.2[/tex]
[tex]\beta=0.3[/tex]
[tex]A_t=1780[/tex]
By using the formula, we get
⇒ [tex]S_t=\alpha\times A_t+(1-\alpha)\times (S_{t-1}+T_{t-1})[/tex]
By substituting the values, we get
[tex]=0.2\times 1780 + (1 - 0.2)\times (1800+500)[/tex]
[tex]=356+0.8\times 2300[/tex]
[tex]=356+1840[/tex]
[tex]=2196[/tex]
StarZinc Company produced 200 defective units last month at a unit manufacturing cost of $50. The defective units were discovered before leaving the plant. StarZinc can sell them as is for $35 or can rework them at a cost of $40 and sell them at the regular price of $100. The total relevant cost of reworking the defective units is:______.
a. $7,800.
b. $5,000.
c. $8,500.
d. $9,100.
Answer:
See below
Explanation:
The cost of producing the defective units is irrelevant to the decision as to rework or to sell the defective units
Option 1
Rework
Sales revenue from sales (200 × $100) = $20,000
Relevant cost 40 × 200
$8,000
Net cash flow
$12,000
Option 2
Outright sale
Revenue from outright sales $35 × 200
$7,000
Starzinc should rework the defective units at it will produce a net cash flow of $12,000
1. Adding supervision at the entrance so that employees comply with the rules during shift changes.
2. Generating reports on employees not complying with the rules and asking these employees to take corrective measures.
3. Implementing a new procedure that is easier for the employees to follow and conducting training so that each employee knows the policy and the procedure before it is enacted.
Which approach to bureaucratic control is described in option 1?
a. feedback
b. feedforward.
c. concurrent.
d. market.
e. clan.
Explanation:
A ball is thrown straight up from a rooftop 320 feet high. The formula below describes the ball's height above the ground, h, in feet, t seconds after it was thrown. The ball misses the rooftop on its way down and eventually strikes the ground. How long will it take for the ball to hit the ground? Use this information to provide tick marks with appropriate numbers along the horizontal axis in the figure shown.
h=-16t^2+16t+320
Ron has a life insurance policy with a face value of $100,000 and a cost of living rider. If the consumer price index has gone up 4%, how much may Ron increase the face value of the policy
Answer:
4,000
Explanation:
Ron has a life insurance policy with a face value of 100,000
The consumer price index has gone up by 4%
Therefore the increase in the policy face value can be calculated as follows
= 100,000 × 4/100
= 100,000 × 0.04
= 4,000
Ron increase the face value of the policy is $4,000
Given that;Face value of life policy = $100,000
Consumer price index growth = 4%
Find:Ron increase the face value of the policy
Computation:Ron increase the face value of the policy = Face value of life policy × Consumer price index growth
Ron increase the face value of the policy = 100,000 × 4%
Ron increase the face value of the policy = $4,000
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"Idaho Mining, Inc. borrows at prime plus 1.5% on its line of credit. The line requires a 15% compensating balance. If the prime rate is 9% and Idaho Mining plans on borrowing for a period of one year, what is the nominal APR of the line of credit?"
Answer:
the nominal annual percentage rate for the line of credit is 12.4%
Explanation:
The computation of the nominal annual percentage rate is given below:
Nominal Annual percentage rate is
= (Prime rate + line of credit) ÷ (1 - compensation balance percentage)
= (9% + 1.50%) ÷ (1 - 15%)
= 10.50% ÷ 85%
= 12.4%
Hence, the nominal annual percentage rate for the line of credit is 12.4%
The same should be considered
Marwick Corporation issues 8%, 5-year bonds with a par value of $1,100,000 and semiannual interest payments. On the issue date, the annual market rate for these bonds is 6%.
What is the bond's issue (selling) price, assuming the following Present Value factors:
1n = i = Present value of an annuity Present value of 1
(Series of payments) (Single sum)
5 8% 3.9927 0.6806
10 4% 8.1109 0.6756
5 6% 4.2124 0.7473
10 3% 8.5302 0.7441
Answer: $1,193,838.80
Explanation:
The price of a bond is the sum of the present value of the coupon payments and the face value at maturity.
= Present value of coupon payments + Present value of face value at maturity
First adjust the variables for semi-annual:
Number of periods = 5 * 2 = 10 semi annual periods
Coupon payment = 8% * 1,100,000 * 1/2 years = $44,000
Yield = 6% / 2 = 3%
Present value of coupon payments:
The coupon payments are constant so are an annuity:
= Annuity * Present value of an annuity factor, 10 periods, 3%
= 44,000 * 8.5302
= $375,328.80
Present value of face value
= 1,100,000 * Present value of 1, 3%, 10 periods
= 1,100,000 * 0.7441
= $818,510
Selling price:
= 375,328.80 + 818,510
= $1,193,838.80
Final goods or services used to compute GDP refer to: the value of outstanding shares of stock of manufacturing firms. the value of outstanding shares of stock of manufacturing firms. the factors of production used to produce output. the factors of production used to produce output. goods and services at the final stage of production they have reached during the year.
Answer:
goods and services at the final stage of production they have reached during the year.
Explanation:
Gross Domestic Products (GDP) is a measure of the total market value of all finished goods and services made within a country during a specific period.
Simply stated, GDP is a measure of the total income of all individuals in an economy and the total expenses incurred on the economy's output of goods and services in a particular country. Also, gross domestic products (GDP) is a measure of the production levels of any nation.
Basically, the four (4) major expenditure categories of GDP are consumption (C), investment (I), government purchases (G), and net exports (N).
Hence, the gross domestic products (GDP) of a country is computed using final goods or services, which simply are goods and services at the final stage of production they have reached during the year.
In conclusion, the goods or services that are purchased by consumers (end users) are typically used for computing final goods or services.
During June, Buttrey Corporation incurred $84,000 of direct labor costs and $24,000 of indirect labor costs. The journal entry to record the accrual of these wages would include a:
Answer:
debit to work in process of $84,000
Explanation:
Preparation of The journal entry to record the accrual of these wages
The journal entry to record the accrual of these wages would include a: DEBIT TO WORK IN PROCESS of 84,000
Debit work in process $84,000
Credit to factory payroll $84,000
(To record the accrual of wages)
Therefore The journal entry to record the accrual of these wages would include a: debit to work in process of $84,000
For a company with significant uncollectible receivables, the direct write-off method is unsuitable because ________. it overstates liabilities on the balance sheet it violates the matching principle it uses estimates for determining the bad debt expenses it is not allowed for tax reasons
Answer:
. it violates the matching principle
Explanation:
The direct write-off method can be regarded as accounting method whereby uncollectible accounts receivable are been written off as a bad debt.This method can be regarded as one involving the charging of bad debts to expense in a case whereby
individual invoices is been identified in that instance as uncollectible.
Matching principle imcan be regarded as accounting principle which states that expenses that is been incurred during a period needed to be recorded at this same particular period that related revenues are been earned. It is principle that stressed that expenses must be invited by businesses to earn revenues.
It should be noted that For a company with significant uncollectible receivables, the direct write-off method is unsuitable because it violates the matching principle .
The closer the smoothing constant, ALPHA, is to 0 the greater the reaction to the most recent demand the greater the dampening, or smoothing, effect the more accurate the forecast will be the less accurate the forecast will be
Answer: the greater the dampening, or smoothing effect
Explanation:
The smoothing constant determines the level at which a forecast is influenced by previous observations. It simply determine the sensitivity of forecasts with regards to the changes in demand.
It should be noted that large values of α will lead to a scenario whereby forecasts will be more responsive to the more recent levels. On the other hand, the smaller values will result in a damping effect. Therefore, the closer the smoothing constant to α, the greater the dampening, or smoothing effect.
o What’s the Difference Between Non-Formal and Informal Learning
Answer:
I hope this will help you
Business Finance 344 Homework You plan to retire in 39 years. You are debating whether to deposit $69,931 into an account earning 9 percent annually today or waiting 14 years before making the deposit. How much more will be in the account when you retire in 39 years if you make the deposit today as opposed to waiting 14 years to make the first deposit
Answer:
If you made the deposits now, you would have $1,412,109.77 more than waiting 14 years.
Explanation:
Giving the following information:
Initial investment (PV)= $69,931
Interest rate (i)= 9%
Number of periods= 39 or 25
To calculate the future value, we need to use the following formula:
FV= PV*(1 + i)^n
Wait 14 years:
FV= 69,931*(1.09^25)
FV= $603,020.65
Deposit now:
FV= 69,931*(1.09^39)
FV= $2,015,130.42
If you made the deposits now, you would have $1,412,109.77 more than waiting 14 years.
Rodgers Corporation produces and sells football equipment. On July 1, Year 1, Rodgers issued $65,000,000 of 10-year, 12% bonds at a market (effective) interest rate of 10%, receiving cash of $73,100,469. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.
Required:
For all journal entries with a compound transaction, if an amount box does not require an entry, leave it blank.
1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, Year 1.
2. Journalize the entries to record the following:
a. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond premium, using the straight-line method. (Round to the nearest dollar.)
b. The interest payment on June 30, Year 2, and the amortization of the bond premium, using the straight-line method. (Round to the nearest dollar.)
3. Determine the total interest expense for Year 1. Round to the nearest dollar.
4. Will the bond proceeds always be greater than the face amount of the bonds when the contract rate is greater than the market rate of interest?
5. Compute the price of $73,100,469 received for the bonds by using the present value tables
Answer:
Rodgers Corporation
Journal Entries:
1. July 1, Year 1:
Debit Cash $73,100,469
Credit Bonds Payable $65,000,000
Credit Bonds Premium $8,100,469
To record the issuance of bonds at a premium.
2. a) December 31, Year 1:
Debit Interest Expense $3,494,976.55
Debit Amortization $405,023.45
Credit Cash $3,900,000.00
To record the first semi-annual interest payment, including amortization.
b) June 30, Year 2:
Debit Interest Expense $3,494,976.55
Credit Amortization $405,023.45
Credit Cash $3,900,000.00
To record the second semi-annual interest payment, including amortization.
3. The total interest expense for Year 1 is $3,494,976.55
4. Yes. The bonds are issued at a premium. So the bond proceeds will always be greater than the face amount, and the contract rate (coupon rate) will always be greater than the market (effective) rate.
5. The price of $73,100,469 received for the bonds by using the present value tables is $1,124.62 ($73,100,469/65,000) per $1,000.
Explanation:
a) Data and Calculations:
Face value of bonds issued = $65,000,000
Price received from the issue $73,100,469
Premium received = $8,100,469
Period of maturity = 10 years
Coupon interest rate = 12%
Market (effective) interest rate = 10%
Payment of interest = semiannually on December 31 and June 30
Analysis of Journal Entries:
1. July 1, Year 1:
Cash $73,100,469 Bonds Payable $65,000,000 Bonds Premium $8,100,469
2. a) December 31, Year 1:
Interest Expense $3,494,976.55 Amortization $405,023.45 Cash $3,900,000.00
b) June 30, Year 2:
Interest Expense $3,494,976.55 Amortization $405,023.45 Cash $3,900,000.00
N (# of periods) 20
I/Y (Interest per year) 10
PMT (Periodic Payment) 3900000
FV (Future Value) 65000000
Results
PV = $73,100,439
Sum of all periodic payments = $78,000,000.00
Total Interest $69,899,569
Pasha works for a manufacturing company in a small town. He reports to his manager that the company is not fulfilling its commitment to the community to reduce pollutants. His manager tells him to ignore the issue and not tell anyone. This is an example of a(n)___________. approach to social responsibility.
a. defensive
b. accommodative
c. reactive
d. obstructionist
e. proactive
Answer:
d. obstructionist
Explanation:
Since in the question it is given that pasha reported his manager that company is not able to fulfill the commitment in order to decrease pollution but the manager said that ignore this issue also dont tell anyone so this represent an obstructionist approach as the firm or the company avoids the social environmental problems so indirectly it breaks the law and their conduct is to be considered as an unethical
Therefore, the option d is correct
ional penalties were estimated to be $766,000 but could be as high as $1,162,000. After the year-end, but before the 2021 financial statements were issued, Raymond accepted an EPA settlement offer of $892,000. Raymond should have reported an accrued liability on its December 31, 2021, balance sheet of
Answer:
$892,000
Explanation:
The computation of the amount that should be recorded as the accrued liability is as follows:
In the case when the liability is to be probable and the amount that could be reasonably predicted so it should be recorded as the contingent liability
And, the accrued liability that should be reported is $892,000 as it is received prior 2021 financial statement issued
Therefore it is $892,000
Panther Co. had a quality-assurance warranty liability of $350,000 at the beginning of 2021 and $310,000 at the end of 2021. Warranty expense is based on 4% of sales, which were $50 million for the year. What amount of warranty costs were paid during 2021?
a. $0.
b. $1,960,000.
c. $2,000,000.
d. $2,040,000.
Answer:B
Explanation: :)
Your division is considering two investment projects, each of which requires an up-front expenditure of $17 million. You estimate that the investments will produce the following net cash flows:
Year Project A Project B
1 $4,000,000 $20,000,000
2 10,000,000 10,000,000
3 20,000,000 6,000,000
Required:
a. What are the two projects' net present values, assuming the cost of capital is 5%?
b. What are the two projects' net present values, assuming the cost of capital is 10%?
c. What are the two projects' net present values, assuming the cost of capital is 15%?
d. What are the two projects' IRRs at these same costs of capital?
Answer:
A
Explanation:
trust the brain bro.....
Joyce Murphy runs a courier service in downtown Seattle. She charges clients $0.50 per mile driven. Joyce has determined that if she drives 3,300 miles in a month, her total operating cost is $875. If she drives 4,400 miles in a month, her total operating cost is $1,095. Joyce has used the high-low method to determine that her monthly cost equation is: total monthly cost = $215 + $0.20 per mile driven.
1. Determine how many miles Joyce needs to drive to break even.
2. Calculate Joyce's degree of operating leverage if she drives 4, 200 miles.
3. Suppose Joyce took a week off and her sales for the month decreased by 25 percent. Using the degree of operating leverage, calculate the effect this will have on her profit for that month.
Answer and Explanation:
The computation is given below:
1.
Given that
Charges per mile = $0.50
Variable Cost per mile driven = $0.20
Fixed Cost = $215
So,
Contribution Margin per mile = Charges per mile - Variable Cost per mile driven
$0.50 - $0.20
= $0.30
Break-even units (in miles) = Fixed Cost ÷ Contribution Margin per mile
= $215 ÷ $0.30
= 717 miles
2.
Revenue for 4,200 miles is
= $0.50 × 4,200
= $2,100
And,
Variable Cost = $0.20 × 4,200
= $840
Now
Contribution Margin = Revenue - Variable Cost
= $2,100 - $840
= $1,260
And,
Fixed Cost = $215
So,
Net Income = Revenue - Variable Cost - Fixed Cost
= $2,100 - $840 - $215
= $1,045
So,
Degree of Operating Leverage = Contribution Margin ÷ Net Income
= $1,260 ÷ $1,045
= 1.2057
3.
Degree of Operating Leverage = % Change in Net Income ÷ % Change in Sales
1.2057 = % Change in Net Income ÷ -25%
1.2057 = % Change in Net Income ÷ -0.25
% Change in Net Income = -0.301425
= -30.1425%
