Answer:chicken
Baby
Explanation:
Explanation:
building economics basically means ur building something in a good way whether its money or value in something it basically grows over time
Suppose a firm in a competitive market earned $3,000 in total revenue and had a marginal revenue of $30 for the last unit produced and sold. What is the average revenue per unit, and how many units were sold
Answer:
100 units were sold at $30 per unit
Explanation:
theoretically, in a perfect competition market, the price of a good = marginal revenue = marginal cost. Also, the market sets the price, not the individual firm.
If total revenue = $3,000 and marginal revenue per unit = $30, then we can assume that the sales price of each unit was $30, therefore, they sold $3,000 / $30 = 100 units.
The average revenue per unit, and how many units were sold is $30 and 100 units.
Based on the information given the average revenue per units is the marginal revenue of the amount of $30.
The number of units sold is calculated as:
Number of units sold= Total revenue/Marginal revenue
Number of units sold= 3000/30
Number of units sold= 100 units
Inconclusion the average revenue per unit, and how many units were sold is $30 and 100 units.
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The financial records for the Harrison Manufacturing Company have been destroyed in a fire. The following information has been obtained from a separate set of books maintained by the cost accountant. The cost accountant now asks for your assistance in computing the missing amounts. Direct Materials Inventory Beg. Bal. 8,000 ? Transferred Out Purchases ? End. Bal. 6,400 Cost of Goods Sold 57,000 Work-in-Process Inventory Beg. Bal. 7,500 ? Transferred Out Materials 18,000 Labor 13,500 Overhead 8,000 End. Bal. ? Finished Goods Inventory Beg. Bal. ? ? Transferred Out Transferred in 39,500 End. Bal. 4,200 What is the amount of the materials purchased?
Answer:
$16,400
Explanation:
Calculation for What is the amount of the materials purchased
Materials purchased=(Direct Materials Inventory Beg. Bal. 8,000 + purchases – $18,000) -End. Bal. 6,400
Materials purchased=-10,000-6,400
Materials purchased = $16,400
Therefore the amount of the materials purchased will be $16,400
Assume that a company uses a standard cost system and applies overhead to production based on direct labor-hours. It provided the following information for its most recent year: Total budgeted fixed overhead cost for the year $ 300,000 Actual fixed overhead cost for the year $ 276,000 Budgeted direct labor-hours 60,000 Actual direct labor-hours 56,000 Standard direct labor-hours allowed for the actual output 57,800 What is the fixed overhead applied to production during the period
Answer:
$289,000
Explanation:
Predetermined overhead rate (Fixed) = Budgeted Fixed overhead cost / Budgeted hours
Predetermined overhead rate (Fixed) = 300,000/60,000
Predetermined overhead rate (Fixed) = $5 per hours
Applied Fixed overhead = Standard hours allowed × Predetermined overhead rate(fixed)
Applied Fixed overhead = 57,800 * $5 per hours
Applied Fixed overhead = $289,000
So, the fixed overhead applied to production during the period is $289,000
Charlie's Chocolates' owner made investments of $66,000 and withdrawals of $28,000. The company has revenues of $99,000 and expenses of $72,000. Calculate its net income.
Answer:
$27,000
Explanation:
Charlie's chocolate has investments of $66,000
Withdrawals is $28,000
The company revenues is $99,000
Expenses is $72,000
Therefore the net income can be calculated as follows
= Revenue - expenses
= $99,000-$72,000
= $27,000
Hence the net income is $27,000
Julie Lambert has a large consulting practice. New clients are required to pay one-half of the consulting fees up front. The balance is paid at the conclusion of the consultation. How does Lambert account for the cash received at the end of the engagement
Answer: cash, earned consulting revenue
Explanation:
Lambert account for the cash gotten from clients through cash, earned consulting revenue. After several business has been done there would be an account of how payments where made, from this, records can be taken how cash where being payed through the records of transfers and payment.
Pilfer Company acquired 90 percent ownership of Scrooge Corporation in 20X7, at underlying book value. On that date, the fair value of noncontrolling interest was equal to 10 percent of the book value of Scrooge Corporation. Pilfer purchased inventory from Scrooge for $90,000 on August 20, 20X8, and resold 70 percent of the inventory to unaffiliated companies on December 1, 20X8, for $100,000. Scrooge produced the inventory sold to Pilfer for $67,000. The companies had no other transactions during 20X8.
Based on the information given above, what amount of sales will be reported in the 20X8 consolidated income statement?
A) $90,000
B) $120,000
C) $100,000
D) $67,000
Answer:
C) $100,000
Explanation:
Based on the information given we were told
that the inventory Purchased by Pilfer from
Scrooge was RESOLD to companies that they are unaffiliated to on December 1, 20X8 for the amount of $100,000 which means that the amount of sales that will be reported in the 20X8 CONSOLIDATED INCOME STATEMENT
will be inventory amount of $100,000 that was resold to the unaffiliated companies.
The amount of sales will be reported in the 20X8 consolidated income statement is $100,000.
The calculation is as follows:Since 70% of the goods are sold of the price of $100,000 therefore we can say that in the consolidated income statement, the sales amount is $100,000.
Therefore, the correct option is C.
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Susan, a manager at Seattle Widgets, hires Bill as a file clerk, but does not inquire into Bills's criminal history. Bill has had several convictions for driving while intoxicated. On his lunch break, Bill gets drunk and assaults a cashier at a local Subway. The cashier discovers Bill's prior DUI convictions and sues Seattle Widgets for hiring Bill a convicted drunk driver. In this lawsuit against Bill, a court would most likely decide that:
Answer:
Seattle Widgets will be held liable because they are respondeat superior in this situation
Explanation:
The concept of respondeat superior states that an entity will be held liable for actions of their agents.
Usually when an agent acts in an official capacity or while performing duties for the employer the employer is held responsible for any wrongful act performed.
In the given instance Susan did not inquired into the criminal past of Bill. He now assaults a cashier while drunk.
If the cashier sues Seattle Widgets, the ruling will most likely hold Seattle Widgets liable because they are a respondeat superior and they were negligent in hiring Bill.
. Underwater Experimental is considering a project which requires the purchase of $498,000 of fixed assets. The net present value of the project is $22,500. Equity shares will be issued as the sole means of financing the project. What will the new book value per share be after the project is implemented given the following current information on the firm
Answer:
$13.25
Explanation:
The computation of the new book value per share is as follows
current market price per share is
= market value ÷ number of shares outstanding
= $936,000 ÷ 60,000
= 15.6
Now
number of shares to be issued is
= cost of the machine ÷current market price per share
= $498,000 ÷ $15.60
= 31923.07692
Now
The new book value per share is
= (current book value + amount raised from the issuance of shares ) ÷ ( current number of shares + number of shares issued for machinery purchase
= ($720,000 + $498,000 ) ÷ ( 60,000 + 31923.08 )
= $13.25
Your company purchases new equipment for $80,000 and depreciates it on a straight line basis over a 5 year period resulting in annual depreciation expense of $16,000. At the end of the 4th year, a buyer purchases it from your company for $30,000. If your company's marginal tax rate is 40%, what is the after tax cash flow or after tax salvage value at the end of year 4
Answer:
$24,400
Explanation:
The computation of the after tax salvage value at the end of year 4 is shown below:
Before that following calculation need to be determined
Book value = Cost - Accumulated depreciation
= $80,000 - ($16000 × 4 years)
= $16,000
Now gain on sale is
= $30,000 - $16,000
= $14,000
Now
After-tax cash flow is
= Sale proceeds - (Tax rate × Gain on sale)
= $30,000 - ($14000 × 40%)
= $24,400
Marsha is 23 years old and single. She cannot be claimed as a dependent by another taxpayer. Marsha earned wages of $18,500 and had $1,500 of federal income tax withholding in tax year 2020. Marsha gave birth to Shelby on November 10, 2020. Marsha paid all the cost of keeping up a home and support for Shelby. Shelby and Marsha are U.S. citizens and have valid Social Security numbers. Marsha filed Single with no dependents on her 2019 tax return and received a $1,200 Economic Impact Payment in May 2020. 3. Marsha is not required to file a return, but should file a return to claim a refund of her federal income tax withholding. True False
Answer:
a. Marsha is required to file a tax return.
Explanation:
Since in the question it is mentioned that Marsha who is 23 years old and single she earned $18,500 wages and federal income tax of $1,500 also Shelby and Marsha are U.S citizens
So as per the given situation she needs to file a tax return
Hence, the correct option is a
And, the same is to be considered
Explain the tax implications of compensation in the form of salary and wages from the perspectives of the employee and employer.
Answer:
The overview including its situation becomes discussed below.
Explanation:
Representatives provide Form W-4 continue providing recruitment information to another boss. Staff may use the W-4 to track retention mostly during the period as persistence becomes handled as if it has been maintained similarly mostly during the period again for benefits of the imposed fee. Employer's post-tax benefit of wages seems to be the benefit of employment minus the charitable donation of compensation. Throughout the case of open marketplace collaborations, the task presumption towards anti-performance compensation charged to something like the CEO as well as the 3 although the most deeply compensated officials, except the CFO, increases limited to $1,000,000 per individual annually.The median price of existing homes: ___________
a. has increased over the past 30 years, thereby acting as a hedge against inflation.
b. has risen less than the Consumer Price Index.
c. always increases in value.
d. tends to be countercyclical, thereby acting as a hedge against the business cycle.
e. remains constant over time.
Answer:
C
Explanation:
The median price of existing homes always increases in value. This is so because as the year goes on, there is an ever increasing need for shelter. Because of the fact that people procreate and more people are living, there is the certain need, or say, demand for shelter. And as a result of this, there doesn't seem to be a decline in the demand, and most likely wouldn't be anytime soon either.
Find a recent news article displaying an employee getting in trouble for lack of integrity
Answer:
boerdddddddd
Explanation:
In a recent article in the newspaper, a research employee in a small scale business caught in a trouble because he made a wrong decision regarding the launch of a new product.
What is a business?
A business can be referred to as an organization or enterprising entity that engages in professional, commercial or industrial activities. There are different types of businesses like sole proprietorships, partnerships, corporations, and more.
The businesses are basically work for profit motive. Businesses can be small-scale or large-scale. Some of the biggest businesses in the world are Amazon and Walmart.
There are different types of partners in a business. The persons who owns the shares of the company is known as shareholder. The partner who can lose only what he or she has invested in a business is the general manager.
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Never, Inc., earns book net income before tax of $500,000. In computing its book income, Never expenses $50,000 more in warranty expense for book purposes than it is allowed to deduct for tax purposes. Never records no other temporary or permanent book-tax differences. Assuming that the U.S. tax rate is 21% and no valuation allowance is required, what is Never's deferred income tax asset reported on its GAAP financial statements
Answer:
$10,500
Explanation:
Calculation for Never's deferred income tax asset reported on its GAAP financial statements
Using this formula
Deferred income tax asset =Expenses*U.S. tax rate
Let plug in the formula
Deferred income tax asset =$50,000*21%
Deferred income tax asset $10,500
Therefore Never's deferred income tax asset reported on its GAAP financial statements will be $10,500
ABC Company has the following beginning balances in its stockholders' equity accounts on January 1, 2021: Common Stock ($2 par value), $1,100; Additional Paid-in Capital, $4,000; Retained Earnings, $27,000; Total Stockholders' equity, $32,100. ABC Company has the following transactions affecting stockholders' equity in 2021: May 18 Issues 220 additional shares of $2 par value common stock for $10 per share. May 31 Purchases 60 shares of treasury stock for $45 per share. July 1 Declares a cash dividend of $2 per share to all stockholders of record on July 15. Hint: Dividends are not paid on treasury stock. July 31 Pays the cash dividend declared on July 1. August 10 Resells 20 shares of treasury stock purchased on May 31 for $56 per share. December 31 Net income for the year ended December 31, 2021, is $800. Required: How many shares of common stock have been issued in total
Answer:
ABC Company has the following beginning balances in its stockholders' equity accounts on January 1, 2021: Common Stock ($2 par value), $1,100; Additional Paid-in Capital, $4,000; Retained Earnings, $27,000; Total Stockholders' equity, $32,100. ABC Company has the following transactions affecting stockholders' equity in 2021: May 18 Issues 220 additional shares of $2 par value common stock for $10 per share. May 31 Purchases 60 shares of treasury stock for $45 per share. July 1 Declares a cash dividend of $2 per share to all stockholders of record on July 15. Hint: Dividends are not paid on treasury stock. July 31 Pays the cash dividend declared on July 1. August 10 Resells 20 shares of treasury stock purchased on May 31 for $56 per share. December 31 Net income for the year ended December 31, 2021, is $800. Required: How many shares of common stock have been issued in total
Oriole Company purchased a truck at the beginning of 2020 for $109400. The truck is estimated to have a salvage value of $4300 and a useful life of 120000 miles. It was driven 18000 miles in 2020 and 26000 miles in 2021. What is the depreciation expense for 2021
Answer:
Annual depreciation 2021= $22,771.67
Explanation:
Giving the following information:
Purchase price= $109,400
Salvage value= $4,300
Useful life in miles= 120,000
It was driven 26,000 miles in 2021.
To calculate the depreciation expense, we need to use the units-of-activity method of depreciation:
Annual depreciation= [(original cost - salvage value)/useful life of production in miles]*miles drive
2021:
Annual depreciation= [(109,400 - 4,300) / 120,000]*26,000
Annual depreciation= $22,771.67
Marigold has the following inventory information. July 1 Beginning Inventory 30 units at $16 $480 7 Purchases 80 units at $22 1760 22 Purchases 20 units at $18 360 $2600 A physical count of merchandise inventory on July 31 reveals that there are 35 units on hand. Using the average-cost method, the value of ending inventory is
Answer:
$640
Explanation:
Calculation for the value of ending inventory using average-cost method
Value of ending inventory=[(2,600÷30 units+80 units+20 units)*35]
Value of ending inventory=[($2600 ÷ 130) × 35]
Value of ending inventory=$20×35
Value of ending inventory=$640
Therefore Using the average-cost method, the value of ending inventory is $640
Mr. West wishes to purchase a condominium for $240,000 in cash upon his retirement 10 years from now. How much should he deposit at the end of each month into an annuity paying 2.7% interest compounded monthly in order to accumulate the required amount
Answer:
He should deposit $1,744.37 at the end of each month.
Explanation:
This can be calculated using the formula for calculating the Future Value (FV) of an Ordinary Annuity as follows:
FV = M * (((1 + r)^n - 1) / r) ................................. (1)
Where,
FV = Future value or the of condominium = $240,000
M = Monthly payment = ?
r = monthly interest rate = 2.7% / 12 = 0.027 / 12 = 0.00225
n = number of months = 10 years * 12 months = 120
Substituting the values into equation (1) and solve for M, we have:
$240,000 = M * (((1 + 0.00225)^120 - 1) / 0.00225)
$240,000 = M * 137.585424499073
M = $240,000 / 137.585424499073
M = $1,744.37
Therefore, he should deposit $1,744.37 at the end of each month.
You’re the purchasing manager for a large trucking company, worried about a spike in oil prices come January 15 when you typically buy your diesel fuel. You estimate you’ll need 200,000 barrels. The spot price is $60/barrel. Which of the following will hedge your risk of oil prices rising between now and then? Enter into a forward contract today to purchase 200,000 gallons of diesel on January 15 from the counterparty at $61/barrel. Enter into a forward contract today to sell 200,000 gallons of diesel on January 15 to the counterparty at $61/barrel. Enter into a forward contract today to purchase 200,000 barrels of diesel on January 15 from the counterparty at whatever the market price is then. Enter into a forward contract today to sell 200,000 barrels of diesel on January 15 to the counterparty at whatever the market price is then.
Answer:
Enter into a forward contract today to purchase 200,000 gallons of diesel on January 15 from the counterparty at $61/barrel.
Explanation:
Since in the given situation, it is mentioned that there is a spike in oil prices that comes on Jan 15 an estimated required barrels is 200,000 also the spot price is $60 per barrel so in order to hedge the risk we should entered into a forward contract today to acquire 200,000 diesel gallon as on Jan 15 from the counter party at $61 per barrel also the price is freezed
The same is to be considered
You are a manager of the Sweatshirt department at Trends, a clothing manufacturer. Trends plan to produce 25,000 sweatshirts. The sweatshirts will be sold to stores for 16$ each. The cost of manufacturing and marketing each sweatshirt is 10$. How many sweatshirts need to be sold for the company to reach break-even point?
Answer:
25,000 sweatshirts Sold in stores( markup) : $16 Raw expenses: $10So you have to reach a break even point 10×25000= $250,00016 × 25000= 400,000Hence to break even they must sell at the very least half of their inventory.Answer: 25,000 sweatshirts
Sold in stores( markup) : $16
Raw expenses: $10
So you have to reach a break even point
10×25000= $250,000
16 × 25000= 400,000
Hence to break even they must sell at the very least half of their inventory.
Levine Inc., which produces a single product, has prepared the following standard cost sheet for one unit of the product. Direct materials (8 pounds at $1.80 per pound) $14.40 Direct labor (6 hours at $14.00 per hour) $84.00 During the month of April, the company manufactures 230 units and incurs the following actual costs. Direct materials purchased and used (1,500 pounds) $2,850 Direct labor (1,410 hours) $19,458 Compute the total, price, and quantity variances for materials and labor.
Answer:
Total materials variance = (Actual quantity * Actual price) - (Standard quantity * Standard price)
= 2,850 - (230 * 14.4)
= 462 (Favourable)
Materials price variance = (Standard price - Actual price) * Actual quantity
= [1.8 - (2,850/1,500)] * 1,500
= 150 Unfavourable
Materials quantity variance = (Standard quantity - Actual quantity) * Standard price
= [(230 * 8) - 1,500] * 1.8
= 612 Favourable
Total labour variance = (Actual hours * Actual rate) - (Standard hours * Standard rate)
= 19,458 - (230 * 84)
= 138 Unfavourable
Labour price variance = (Standard rate - Actual rate) * Actual hours
= [14 - (19,458/1,410)] * 1,410
= 282 Favourable
Labour quantity variance = (Standard hours - Actual hours) * Standard rate
= [(230 * 6) - 1,410] * 14
= 420 Unfavourable
The credit that is created when a supplier sells goods and services on an account with extended payment terms is called:_______
Answer:
Trade credit
Explanation:
The answer to this question is trade credit. Trade credit can be defined as a loan that is given by one trader to another trader when they buy goods and services without immediate payment. That is when these are bought on credit. Through trade credit, there is the facilitation in the purchase of supplies without paying for the suppliers immediately. It is mostly used as a way of short-term financing.
Impairment--Natalie Lui Corp is an international Company that uses IFRS. She owns machinery with a book value of $450,000. it is estimated that the machinery will generate future non-discounted cash flows of $350,000 and discounted cash flows of $400,000. the machinery has a fair value of $300,000. Natalie should recognize a loss on impairment a of assuming she is using IFRS. A. $150,000 B. $100.000 C. $50,000 D. 0
Answer:
C. $50,000
Explanation:
Under IFRS section IAS 36, an impairment loss results from an asset's carrying value being lower than its fair market value or value in use. In this case, the fair market value of the asset (the price at which it could be sold) is $300,000, while its value in use is $400,000 (discounted to present value). In order to calculate the impairment loss, we must use the highest, in this case the value in use.
Impairment loss = $450,000 (carrying value) - $400,000 (value in use) = $50,000
On January 1, you sold short one round lot (that is, 100 shares) of Lowe's stock at $27.70 per share. On March 1, a dividend of $3.30 per share was paid. On April 1, you covered the short sale by buying the stock at a price of $22.00 per share. You paid 25 cents per share in commissions for each transaction. a. What is the proceeds from the short sale (net of commission)
Answer: $2,745
Explanation:
Proceeds from short sale net of commission is ;
= Number of shares sold * ( Market price of shares - Commission paid)
= 100 * (27.70 - 0.25)
= $2,745
The Wet Corp. has an investment project that will reduce expenses by $25,000 per year for 3 years. The project's cost is $20,000. If the asset is part of the 3-year MACRS category (33.33% first year depreciation) and the company's combined tax rate is 25%, what is the cash flow from the project in year 1? (Do not round intermediate calculations. Round your answer to the nearest dollar amount.) $19,866 $21,196 $20,416 $21,876
Answer:
c. $20,416.50
Explanation:
Cost of assets = 20,000
Depreciation year 1 = 33% * 20,000 = $6,666
Annual cost saving = 25,000
Tax rate = 25%
Operating cash flow Year 1 = Cost saving*(1 - tax) + Tax*Depreciation
Operating cash flow Year 1 = 25,000*(1-0.25) + 0.25*6,666
Operating cash flow Year 1 = 25,000*0.75 + 0.25*6,666
Operating cash flow Year 1 = 18750 + 1666.5
Operating cash flow Year 1 = $20,416.5
So, the cash-flow from the project in year 1 is $20,416.50
16 Nadia intends to get married in eight years' time. She estimates that the cost
of the wedding will be RM20,000 then. She intends to save this amount by
making equal monthly deposits at the end of each month in a bank that pays
5% compounded monthly.
(a) How much will this monthly deposit be?
(b) After paying for two years, the estimated cost of the wedding has gone up
to RM30,000
(i) What should the new monthly deposits be?
(ii) Instead of making the additional monthly deposits, Nadia decides
to make a lump sum deposit RMX at the end of two years. Calculate
the value of X.
Answer:
Nadia
a. Monthly deposit = RM169.86.
b. New monthly deposit = RM309.48
c. The value of X = RM22,393.57
Explanation:
a) Nadia will need to contribute RM169.86 at the end of each period to reach the future value of RM20,000.00.
FV (Future Value) RM19,999.99
PV (Present Value) RM13,417.11
N (Number of Periods) 96.000
I/Y (Interest Rate) 0.417%
PMT (Periodic Payment) RM169.86
Starting Investment RM0.00
Total Principal RM16,306.76
Total Interest RM3,693.23
b) Contribution after two years = RM169.86 * 24 = RM4,076.64
Additional contribution required = RM25,923.36 (RM30,000 - 4,076.64)
Nadia will need to start contributing RM309.48 at the end of each period after two years to reach the future value of RM25,923.36.
FV (Future Value) RM25,923.34
PV (Present Value) RM19,216.00
N (Number of Periods) 72.000
I/Y (Interest Rate) 0.417%
PMT (Periodic Payment) RM309.48
Starting Investment RM0.00
Total Principal RM22,282.27
Total Interest RM3,641.08
c) Nadia will need to invest RM22,393.57 at the beginning to reach the future value of RM25,923.36.
FV (Future Value) RM25,923.36
PV (Present Value) RM22,393.57
N (Number of Periods) 3.000
I/Y (Interest Rate) 5.000%
PMT (Periodic Payment) RM0.00
Starting Investment RM22,393.57
Total Principal RM22,393.57
Total Interest RM3,529.79
A client has created a budget based on their customer, Lou's Luggage. They want a report that shows actuals versus budget for this customer by quarter for the whole year.
Answer:
2. Select Lou's Luggage budget
3. Show grid Accounts vs. Quarters
4. Filter for Lou's Luggage customer
From online research, the question and multiple choices
Which 3 customization are necessary?(Select all that apply)
1. Filter by Paid status
2. Select Lou's Luggage budget
3. Show grid Accounts vs. Quarters
4. Filter for Lou's Luggage customer
5. Filter by Product/Service = Specified
Explanation:
Getting to Lou's luggage customer reports requires drilling down to the specifics. the system will give the reports by following the steps below.
2. Select Lou's Luggage budget
3. Show grid Accounts vs. Quarters
4. Filter for Lou's Luggage customer
began a new development project in 2020. The project reached technological feasibility on June 30, 2021, and was available for release to customers at the beginning of 2022. Development costs incurred prior to June 30, 2021, were $3,210,000, and costs incurred from June 30 to the product release date were $1,410,000. The 2022 revenues from the sale of the new software were $4,008,000, and the company anticipates additional revenues of $6,012,000. The economic life of the software is estimated at four years. Amortization of the software development costs for the year 2022 would be:
Answer:
$352,500
Explanation:
Development costs incurred prior to June 30, 2021 must be expensed, they cannot be capitalized.
Capitalized R&D costs = $1,410,000
External use software (software intended to be sold to third parties) should be amortized using straight line amortization (4 years in this case):
amortization expense = $1,410,000 / 4 = $352,500
Company A decided to expand its office space and purchased 20 new desks and chairs from a supplier on July 1st. The desks and chairs were purchased on credit, and the company had 60 days to pay for them. Company A paid for the desks and chairs on August 15th. How would the transaction on August 15th impact the accounting equation of Company A
Answer:
The July 1st purchase increased assets (furniture) and liabilities (accounts payable).
The August 15th payment decreases assets (cash) and decreases liabilities (accounts payable is gone)
Explanation:
The important thing about a balance sheet or the accounting equation is that they must balance. If the total numbers on both sides are not the same, then you did something wrong. If assets increase, liabilities or equity must increase also, and vice versa.
Diamond Machine Technology has invested $250,000 in developing a sharpener. Each sharpener costs $3 to make. In addition, fixed costs for the sharpener are $10,000. The company expects to sell 100,000 sharpeners this year to local supermarkets (you should assume this sales forecast is accurate). Diamond Machine's markup on sales is 30 percent, and it wants to earn a 20% ROI. Calculate both the markup price and the target-return price for the sharpener. How much profit can Diamond Machine earn this year if they sell at the markup price
Answer:
Diamond Machine Technology
a) Markup price = $4.03
b) Target return price = $3.60
Explanation:
Investment = $250,000
Cost of each sharpener = $3
Additional fixed costs = $10,000
Quantity of sharpeners to sell for the year= 100,000
Markup on sales = 30%
Return on Investment (ROI) = 20%
Markup price = (($3 * 100,000) + $10,000))* 1.3
= $403,000 /100,000 = $4.03
Return on Investment:
Profit for the year = 100,000($4.03 - $3) - $10,000 = $93,000
ROI = $93,000/$250,000 * 100 = 37.2%
Target revenue = (20% of $250,000) + $310,000 = $360,000
Target return price = $360,000/100,000 = $3.60