Answer:
15.167%
Explanation:
For computing the WACC we need to do the following calculations which are shown below:
Cost of equity = Risk free rate + Beta × Market risk premium
= 3% + 2 × 9%
= 21%
After tax cost of debt = Cost of debt × (1-Tax Rate)
= 5% × (1 - 0.30)
= 3.50%
Now
WACC = Weight of debt × Cost of debt + Weight of equity × Cost of equity
= 5 ÷ 15 × 3.50 + 10 ÷ 15 × 21
= 1.167% + 14%
= 15.167%
Selling price per pair of skis $ 450
Variable selling expense per pair of skis $ 46
Variable administrative expense per pair of skis $ 19
Total fixed selling expense $ 140,000
Total fixed administrative expense $ 115,000
Beginning merchandise inventory $ 75,000
Ending merchandise inventory $ 120,000
Merchandise purchases $ 315,000
1. Prepare a traditional income statement for the quarter ended March 31.
2. Prepare a contribution format income statement for the quarter ended March 31.
3. What was the contribution margin per unit?
(1) The traditional format income statement for Alpine House, Inc for the quarter ended March 31 is shown below:ParticularsAmount ($)Sales1,350,000Less: Cost of Goods Sold:Beginning merchandise inventory 75,000 Add: Merchandise purchases 315,000 Goods available for sale390,000Less: Ending merchandise inventory 120,000 Cost of goods sold270,000Gross Profit1,080,000Less:
Operating Expenses:Variable selling expense46* units soldVariable administrative expense19* units soldTotal Variable Expenses65 Fixed Selling Expenses 140,000Fixed Administrative Expenses115,000Total Operating Expenses255,000Net Operating Income 825,000*Calculation of variable expenses:Variable selling expense per unit= $46Variable administrative expense per unit= $19Total variable expense per unit= $65($46 + $19)
(2) The contribution format income statement for the quarter ended March 31 is shown below:ParticularsAmount ($)Sales1,350,000Less: Variable Expenses:Variable selling expense (46*3,000 units)138,000Variable administrative expense (19*3,000 units)57,000
Total Variable Expenses195,000Contribution Margin1,155,000Less: Fixed Expenses: Fixed selling expenses140,000 Fixed administrative expenses115,000Total Fixed Expenses 255,000Net Operating Income900,000*Calculation of units sold: 3,000 units were sold (Sales/ Selling price per pair of skis = 1,350,000/450 = 3,000 units)
(3) The contribution margin per unit is $195. ($450 - $255) = $195.Contribution margin per unit is calculated as follows:Contribution margin per unit = Selling price per unit - Total variable expenses per unitSelling price per unit = $450Variable expenses per unit = $65 ($46 + $19)Contribution margin per unit = $450 - $65 = $385
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Answer:
recognize a liability and an expense in its financial statements.
Explanation:
Contingent liability refers to a liability that arises in some unpredictable future event. In this, the amount is expected or predicted.
Here in the question the actual occurrence would be categorized also its amount would be predicted so the same is to be recorded as a liability and recorded as an expense in the financial statement i.e. balance sheet & income statement
Answer: b. stocking quantity of product B is higher.
Explanation:
We are using the Newsvendor model and are told that the products have identical cost, retail price, and demand parameters and the same short selling season.
Using this model, it is important to understand 2 terminologies for this question, Overage cost and Underage costs.
Overage Costs is the cost of unused inventor and is calculated by subtracting Salvage Value from the cost price.
Underage costs are costs arising from unmet Demand. In this scenario they are the same because both products share the same demand.
The Overage costs for the products are,
Overage cost for Product X =100-75
=25%
Overage cost for Product Y = 20%
When deciding which product to stick more of we look at the one with the higher CRITICAL RATIO.
The formula of which is,
= Cu/(Cu+Co)
Where,
Cu is the Underage cost,
Co is the Overage cost
As earlier mentioned, both have the same Underage cost meaning that B will give a higher CRITICAL ratio as it's Co is smaller.
Product B should therefore be stocked more than Product A.
Answer:
Stocking quantity of product B is higher
Explanation:
Overage cost for Product A(Co)=100-75=25%
Overage cost for Product B (Co)=20%
The underage cost (Cu) for both the products is same hence critical ratio i.e, Cu/(Cu+Co) is lower for product A than Product B which means product B should will be stocked more compare to product A
So the correct answer will be stocking quantity of product B is higher
b. cultural
c. societal
d. economic
Answer:
a. technological
Explanation:
since in the given situation it is mentioned that the manufactured are concerned with respect to the availability of the electricity in the global marketplace. Now when the compatibility problem is there so this is the technological difference as here the compatibility is to be seen whether it is fiited or not
Therefore the option a is correct
Answer:
At 8.72% the company would be indifferent between accepting or rejecting the project
Explanation:
To be indifferent to accepting or rejecting the project, the initial cost of the project should equal the present value of all expected cash inflow to the project i.e. the Break-even point which is the point at which revenue = cost, thereby generating zero profit.
From the question, Young Pharmaceuticals is investing $2.42 million and expects an annual year end cash flow of $211,000 forever. We therefore apply the annuity to perpetuity formula
PV of perpetuity = Periodic cashflow/interest rate
cross multiply and make Interest the subject of the formular
= Interest = Periodic cashflow/PV of perpetuity
i = 211000/2420000
= 0.0872
= 8.72%