Answer:
b
Explanation:
If a company's strategy is outdated, the company might fail today.
For example, let us assume that all companies in an industry advertise on social media and tailor their products to the teenagers. But a company continues to advertise only on radio and newspaper. Very soon the company will fail.
Or if a media company doesn't incorporate social media to reach customers. With less people reading newspaper, if the company sticks only to newspapers, soon it would fail
other options contribute to success of a firm
Given a prior forecast demand value of 230, a related actual demand value of 250, and a smoothing constant alpha of 0.1, what is the exponential smoothing forecast value for the following period
Answer:
232
Explanation:
Calculation for what is the exponential smoothing forecast value for the following period
Exponential smoothing forecast value=230 + 0.1 * (250-230)
Exponential smoothing forecast value=230 + 0.1*20
Exponential smoothing forecast value = 232
Therefore the exponential smoothing forecast value for the following period will be 232
What best describes the example/instance for building a model to identify cross-sell opportunities (trying to convince people to adopt a new product category - say jewelry - that they have not bought in before)
Answer:
d) All current customers who up to a certain point in time have NOT bought in the jewelry category but did buy jewelry in the next time frame
Explanation:
Cross-sell opportunities are employed by online and in-person marketers with the aim of convincing buyers to chose another product from a product category that they are interested in. For example, if the customer bought a necklace, the site might suggest that users who bought a necklace also bought a pendant. The aim of this suggestion is to convince the consumer to purchase an item that might be useful to him judging from the products he just indicated interest in.
Therefore, a good cross-sell model will identify customers who bought jewelry but not from a particular jewelry category.
According to the elasticity computation of 0.50, by how much would popcorn sales fall if the price increased by:
Answer:
a. Popcorn sales would fall by 10%.
b. Popcorn sales would fall by 25%.
Explanation:
Question wants to know how much popcorn sales would fall by if the price increased by 20% and 50%.
a. Price increased by 20%
Price elasticity measures the change in quantity demanded as a result of a change in price. For normal goods it is assumed that the elasticity is negative which means that an increase in price leads to a decrease in quantity demanded:
Change in quantity demanded = elasticity * change in price
= 0.5 * 20%
= 10%
Popcorn sales would fall by 10%.
b. Price increased by 50%:
= 0.5 * 50%
= 25%
Popcorn sales would fall by 25%.
Preston Woods has 17,500 shares of stock outstanding along with $408,000 of interest-bearing debt. The market and book values of the debt are the same. The firm has sales of $697,000 and a profit margin of 6.8 percent. The tax rate is 21 percent, the debt-equity ratio is 40 percent, and the price-earnings ratio is 11.8. The firm has $130,000 of current assets of which $41,200 is cash. What is the enterprise value?
Answer:
The enterprise value is $926,450
Explanation:
First, we need to calculate Earnings per share (EPS) as follow
EPS = Net profit / Numbers of outstanding shares = (
Where
Net Profit = Sales x Profit Margin = $697,000 x 6.8% = $47,396
Numbers of outstanding shares = 17,500 shares
Placing values in the formula
EPS = $47,396 / 17,500 shares = $2.71 per share
Now calculate market capitalization as follow
Market Capitalization = Price of stock x Numbers of outstanding shares
where
Price of stock = Price earning ratio x earning per share = 11.8 x $2.71 = $31.98
Numbers of outstanding shares = 17,500 shares
Placing values in the formula
Market Capitalization = $31.98 x 17,500 = $559,650
Enterprise value can be calculated using the following formula
Enterprise Value = Market capitalization + Value of debt - Cash
Where
Market capitalization = $559,650
Value of debt = $408,000
Cash = $41,200
Placing values in the formula
Enterprise Value = $559,650 + $408,000 - $41,200
Enterprise Value = $926,450
What would it cost an insurance company to replace a family's personal property that originally cost $42,000
Answer: $48,300
Explanation:
The last part of the question is:
The replacement costs for the items have increased 15 percent.
The Insurance company will have to replace the total value of the family's property including whatever replacement costs that may have arisen.
Total cost = 42,000 * ( 1 + 15%)
= $48,300
Bob works for Allies Electronics making switches. He is paid $0.40 per switch. Last week he made 635 switches on regular time and 126 switches during overtime. Find his gross earnings for the week if time-and-a-half per switch is paid for overtime.
Answer:
Total earnings= $329.6
Explanation:
Giving the following information:
He is paid $0.40 per switch. Last week he made 635 switches on regular time and 126 switches during overtime.
We need to calculate the total earnings:
Regular time= 635*0.4= $254
Overtime= 126*(0.4*1.5)= $75.6
Total earnings= $329.6
Last year you purchased a new car for $18,500. Today you sold the car for $14,750. If the car's value is measured by what someone is willing to pay for it, what was the percentage change in the value of the a car
Answer:
-20.27%
Explanation:
Value = ($14,750 / $18,500) - 1 = -20.27%
A potential future negative impact to value and/or cash flows is often discussed in terms of probability of loss and the expected magnitude of the loss. This is called
Answer:
Risk.
Explanation:
A potential future negative impact to value and/or cash flows is often discussed in terms of probability of loss and the expected magnitude of the loss. Thus, this is called risk.
Risk management can be defined as the process of identifying, evaluating, analyzing and controlling potential threats or risks present in a business as an obstacle to its capital, revenues and profits. This ultimately implies that, risk management involves prioritizing course of action or potential threats in order to mitigate the risk that are likely to arise from such business decisions.
An effective and efficient way to mitigate risk in business is through the use of internal controls.
Hence, internal controls if properly executed helps to increase operational efficiency, protect and safeguard assets, provides accurate financial information, prevents fraudulent or unlawful behaviors, timeliness of financial records and reporting.
Scot and Vidia, married taxpayers, earn $246,000 in taxable income and $5,000 in interest from an investment in City of Tampa bonds. (Use the U.S. tax rate schedule for married filing jointly). Required: If Scot and Vidia earn an additional $81,200 of taxable income, what is their marginal tax rate on this income
Answer:
Currently (assuming a 2020 tax schedule), Scott and Vidia's tax liability = $29,211 + [24% x ($246,000 - $171,050)] = $47,199*
municipal bonds are not taxed by the federal government, so they do not pay any taxes on the interests earned on the City of Tampa bonds.
if they earn an additional $81,200, then their tax liability will be:
$66,543 + [32% x ($327,200 - $326,600)] = $66,735
their marginal tax rate = 32%
A preferred stock that pays an annual dividend of $10, has a par value of $100, and has a required return of 5% will be valued at $200. Group of answer choices True False
Answer:
The answer is true
Explanation:
Vo = D/Kp
Vo is the value of preferred stock/shares
D is the dividend
Kp is the cost of preferred stock/share
To confirm whether the value of stock is actually $200, we perform the following:
D = $10
Kp = 5% or 0.05
10/0.05
=$200.
The answer is true
The advantages of focusing a company's entire competitive effort on a single market niche allows for
Answer:
scaling operations to serve the customer market segment
Explanation:
This allows for scaling operations to serve the customer market segment. By focusing on a single market they can ignore other markets and make all of their business decisions on growing their business specifically to meet all of the demand of that current market. This allows them to scale rapidly while also maintaining great customer service for their company in that market segment. This ultimately, allows for even faster growth for the company which correlates into increased profits.
Juan is temporarily between jobs while searching for a new one. This type of short-term unemployment is called __________ unemployment.
Answer:
frictional unemployment
Explanation:
Espresso Express operates a number of espresso coffee stands in busy suburban malls. The fixed weekly expense of a coffee stand is $1,200 and the variable cost per cup of coffee served is $0.22.
Required:
Fill in the following table with your estimates of total costs and cost per cup of coffee at the indicated levels of activity for a coffee stand.
Cups of Coffee Served in a Week
2,000 2,100 2,200
Fixed cost ? ? ?
Variable cost ? ? ?
Total costs ? ? ?
Average cost per cup of coffee served ? ? ?
Answer:
fixed cost : $1,200 $1,200 $1,200
Varaible cost 440 462 484
Total cost 1640 1662 1684
Average cost 0.82 0.79 0.77
Explanation:
Fixed costs are costs that do not vary with output. e,g, rent, mortgage payments
If production is zero or if production is a million, Mortgage payments do not change - it remains the same no matter the level of output.
Hourly wage costs and payments for production inputs are variable costs
Variable costs are costs that vary with production
If a producer decides not to produce any output, there would be no need to hire labour and thus no need to pay hourly wages.
Total cost = fixed cost + variable cost
Average cost = total cost / quantity produced
Match the terms relating to the basic terminology and concepts of corporate finance on the left with the descriptions of the terms on the right. Read each description carefully and type the letter of the description in the Answer column next to the correct term. These are not necessarily complete definitions, but there is only one possible answer for each term Term Answer Description This benefit is conferred by the corporate form of organization in which an investor's personal responsibility for the debts of the business are limited to the amount the investor has invested in the firm
Finance A. Corporation B. This is the worth of a good or service as established by the discounted and current value of the item's cash flows C. This general term is given to an individual or a group that has an interest in, or is affected by, a business Treasurer Limited liability D. This position and title is held by the individual responsible for planning and managing how the firm is financed, when its funds are raised, and how its risks are managed. This is a company's attitude and standards of conduct toward its stakeholders, including its customers, stockholders, creditors, employees, suppliers, management, and the community This is a participant in a partnership, whose personal assets may not be seized to satisfy the debts of the partnership. This state-created entity is authorized to conduct business and offer its owners an investment with an unlimited life. Business ethicS E. Limited partner F. Double taxation of dividends Shareholder wealth maximization G. This is a disadvantage of the corporate organization since it requires taxes to be levied on both the income of the firm and the dividend income earned by its shareholders It addresses how financial resources are obtained, allocated, and managed by a person, a business organization, or a governmental entity H. Stakeholder I. Value J. This primary goal of financial management is evaluated by the effect of a decision or an action on the value of the firm.
Answer:
1. Limited liability
2. Value
3. Stakeholder
4. Treasurer
5. Business ethics
6. Limited partner
7. Corporation
8. Double taxation of dividend
9. Finance
10. Shareholder wealth maximization
Explanation:
1. Limited liability: This benefit is conferred by the corporate form of organization in which an investor's personal responsibility for the debts of the business are limited to the amount the investor has invested in the firm.
2. Value: This is the worth of a good or service as established by the discounted and current value of the item's cash flows.
3. Stakeholder: This general term is given to an individual or a group that has an interest in, or is affected by, a business.
4. Treasurer: This position and title is held by the individual responsible for planning and managing how the firm is financed, when its funds are raised, and how its risks are managed.
5. Business ethics: This is a company's attitude and standards of conduct toward its stakeholders, including its customers, stockholders, creditors, employees, suppliers, management, and the community.
6. Limited partner: This is a participant in a partnership, whose personal assets may not be seized to satisfy the debts of the partnership.
7. Corporation: This state-created entity is authorized to conduct business and offer its owners an investment with an unlimited life.
8. Double taxation of dividend: This is a disadvantage of the corporate organization since it requires taxes to be levied on both the income of the firm and the dividend income earned by its shareholders.
9. Finance: It addresses how financial resources are obtained, allocated, and managed by a person, a business organization, or a governmental entity.
10. Shareholder wealth maximization: This primary goal of financial management is evaluated by the effect of a decision or an action on the value of the firm.
Invisible Hand School of Social Responsibility Group of answer choices Advises managers to be responsible to shareholders by being responsive to the larger society. Role of business is to serve larger society and it does so best when serving shareholders only. Advises managers to serve shareholders and to act only with shareholders' interests in mind. Role of business is to serve larger society, so it should serve the needs of the larger society.
Answer:
The right alternative is Option b (Role of...............................shareholders only).
Explanation:
As per another invisible hand mode of philosophy, the business serves a wider community unless it serves its institutional investors. Whenever the company makes money, the stockholders seem to be effective as well as the organization would be likely to succeed even though the organization across the financial institution seems to have an increased amount of unemployment.Other selections are not comparable to just the example throughout the question. Therefore this option seems to be the appropriate one.
Assuming a FICA tax rate of 7.65% on the first $117,000 in wages, 1.45% on amounts in excess of $117,000, and a federal income tax rate of 20% on all wages, what would be an employee's net pay for the year if he earned $180,000 for the year
Answer:
Net pay $134,136
Explanation:
The computation of the net pay for the year is given below:
Gross Pay $180,000
Less:
FICA taxes
On $117000 = 7.65% $8,950.5
On (($180,000 - $117,000) × 1.45%) $913.5
Federl income tax (20% of $180,000) $36,000
Net pay $134,136
What is the weighted average cost of capital for a corporation that finances an expansion project using 25% retained earnings and the rest as debt capital
Answer:
The weighted average cost is 24.50%
Explanation:
The weighted average cost of capital ( WACC ) is the cost incurred to finance a project or business as a whole. This rate based on the weights of each financing option.
Use the following formula in order to calculate the weighted average cost of capital
Weighted average cost of capital ( WACC ) = ( Weight of equity financing x Cost of Equity financing ) + ( Weight of Debt financing x Cost of Debt financing )
Where
Weight of equity financing = 25%
Weight of Debt financing = 100% - 25% = 75%
Cost of Equity financing = 11%
Cost of Debt financing = 29%
Placing values in the formula
Weighted average cost of capital ( WACC ) = ( 25% x 11% ) + ( 75% x 29% )
Weighted average cost of capital ( WACC ) = 2.75% + 21.75%
Weighted average cost of capital ( WACC ) = 24.50%
Suppose a food pantry received a donation and allowed volunteers to vote on how the funds were to be spent. Three options were provided, with the donation only covering the cost of one project. The projects included improvements to the building, additional purchases of food, and purchasing a vehicle for food delivery. The majority of volunteers voted for purchasing additional food, with purchasing a vehicle coming in second. Since only one project could be funded, what is the opportunity cost of the decision to purchase additional food
Answer:
The opportunity cost of the decision to purchase additional food is the lost benefit that would have been derived if the decision was to purchase a vehicle for food delivery.
Explanation:
The opportunity cost in this scenario is the forgone benefit that would have been derived by the purchasing of a vehicle for food delivery, which was the second best option not chosen. In evaluating opportunity costs, the costs and benefits of every available option (improvements to the building, additional purchases of food, and purchasing a vehicle for food delivery) must be considered and weighed against the others. Since building improvements are ruled out, the decision choice is between purchasing a new vehicle and additional purchases of food.
The following classification scheme typically is used in the preparation of a balance sheet:
a.
Current assets
f.
Current liabilities
b.
Investments and funds
g.
Long-term liabilities
c.
Property, plant, and equipment
h.
Contributed capital
d.
Intangible assets
i.
Retained earnings
e.
Other assets
Using the letters above and the format below, indicate the balance sheet category in which an entity typically would place each of the following items. Indicate a contra account by placing your answer in parentheses.
1._____Long-term receivables
2._____Accumulated amortization
3._____Current maturities of long-term debt
4_____Notes payable (short term)
5._____Accrued payroll taxes
6._____Leasehold improvements
7._____Retained earnings appropriated for plant expans
8._____Machinery
9._____Donated capital
10._____Short-term investments
11._____Deferred tax liability(long term)
12._____Allowance for uncollectible accounts
13._____Premium on bonds payable
14. _____Supplies inventory
15._____Additional paid-incapital
16._____Work-in-process inventory
17._____Notes receivable (short-term)
18._____Copyrights
19._____Unearned revenue(long-term)
20._____Inventory
Answer:
Long-term Receivables: Other Assets
Accumulated Amortization: Intangible Assets
Current maturities of long-term debt: Current Liabilities
Notes payable (short-term): Current Liabilities
Accrued payroll taxes: Current Liabilities
Leasehold improvements: Property, Plant and Equipment
Retained earnings appropriated for plant expansion: Retained Earnings
Machinery: Property, Plant and Equipment
Donated capital: Contributed Capital
Short-term investments: Current Assets
Deferred tax liability (long-term): Long-term Liabilities
Allowance for uncollectible accounts: Current Assets
Premium on bonds payable: Long-term Liabilities
inventory: Current Assets
Additional paid-in capital: Contributed Capital
The following classification scheme typically is used in the preparation of a balance sheet is Current assets. (a)
Other Assets - Long-term receivables Intangible Assets - Accumulated amortization Current Liabilities - Current maturities of long-term debtCurrent Liabilities - Notes payable (short term)Property, Plant and Equipment - Accrued payroll taxes Property, Plant and Equipment - Leasehold improvementsRetained Earnings - Retained earnings appropriated for plant expansionProperty, Plant and Equipment - MachineryContributed Capital - Donated capitalCurrent Assets - Short-term investmentsLong-term Liabilities - Deferred tax liability(long term)Current Assets - Allowance for uncollectible accountsCurrent Assets - Premium on bonds payableCurrent Assets - Supplies inventoryContributed Capital - Additional paid-incapitalLong-term Liabilities - Work-in-process inventoryContributed Capital - Notes receivable (short-term)Current Assets - CopyrightsContributed Capital - Unearned revenue(long-term)Current Assets - InventoryWhat is Current Assets?
In accounting, a current asset is any asset which can reasonably be expected to be sold, consumed, or exhausted through the normal operations of a business within the current fiscal year or operating cycle or financial year.
What is Classification scheme?In information science and ontology, a classification scheme is the product of arranging things into kinds of things or into groups of classes.
What is a balance sheet?In financial accounting, a balance sheet is a summary of the financial balances of an individual or organization.
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On December 31, 2015. management had determined that it would not be able to collect the $1,200 owed to It by its customer Acme. Inc. On September 15, 2016, a check in the amount of $600 was unexpectedly received from Acme Management does not expect any future collections from Acme. (The company uses the direct write-off method to account for its uncollectible accounts.)Required:
Prepare the necessary journal entry to record the events. (Use a compound entry Instead of preparing two separate journal entries.)
Answer:
December 31, 2015, bad debt written off
Dr Bad debt expense 1,200
Cr Accounts receivables 1,200
September 15, 2016, write off is partially reversed and a partial payment is collected
Dr Accounts receivable 600
Cr Bad debt expense 600
Dr Cash 600
Cr Accounts receivable 600
The following cost data pertain to the operations of Quinonez Department Stores, Inc., for the month of September. Corporate headquarters building lease$78,000 Cosmetics Department sales commissions--Northridge Store$5,270 Corporate legal office salaries$66,500 Store manager's salary-Northridge Store$12,200 Heating-Northridge Store$20,400 Cosmetics Department cost of sales--Northridge Store$39,100 Central warehouse lease cost$9,800 Store security-Northridge Store$16,200 Cosmetics Department manager's salary--Northridge Store$4,310 The Northridge Store is just one of many stores owned and operated by the company. The Cosmetics Department is one of many departments at the Northridge Store. The central warehouse serves all of the company's stores. What is the total amount of the costs listed above that are NOT direct costs of the Northridge Store
Answer:
the total amount of non-direct cost is $154,300
Explanation:
The computation of the total amount of non-direct cost is shown below:
= Corporate headquarters building lease + Central warehouse lease cost + Corporate legal office salaries
= $78,000 + $9,800 + $66,500
= $154,300
Hence, the total amount of non-direct cost is $154,300
Explain which information you would need to take into consideration when deciding to receive $5,000 today or $5,500 one year from today.
Answer:
You should take into consideration the time value of money, inflation rates, and real and nominal interest rates.
Explanation:
Money today tends to be more valuable than money in the future if it does not earn interest, because of inflation. $5,000 dollars today are worth more than $5,000 dollars 5 years from now.
You should also take into account inflation rates. As we can see, $5,500 is 10% higher than $5,000, so if inflation in one year is less than 10%, you will be obtaining more purchasing power by receiving the $5,500 in one year. However, if inflation ends up being higher than 10%, you will be better off with the $5,000 today.
Finally, nominal and real interest rates should also be taken into account. Nominal interest rate is the rate that is agreed upon the investment without taking into account inflation, while real interest rates is nominal interest rates minus inflation.
how do large corporation can help during the health crisis?
Answer:
they can donate
Explanation:
they can donate money and other stuff to
In what ways are consumer preferences changing in Ford’s different market segments and geographies? Are consumers able to articulate what they will be eager to buy five years from now?
Answer:
The summary including its discussion is characterized throughout the explanation segment elsewhere here.
Explanation:
Consumer preferences start changing throughout the distinct markets and regions of Ford owing to all of the corporation's product categories. This same Ford engine will use the quality characteristics, advantages given, use circumstance, product category, difference to a rival company or far from some kind of competitive edge to modify customer preferences throughout various market categories as well as geographic areas.
Because once positional awareness orientation has been established, a range of different strategic strategy will be established for the specific customers & component throughout different geographical areas as well as the appropriate potential benefits will be tried to interact to encourage Ford goods in smaller client segments. Selection changes are however helped bring about by considerations including the toughness as well as the credibility of the organization, the marketing techniques including its competing companies, the characteristics of the industry as well as the differentiation throughout the items provided throughout the category as well as the real economy.Developments are indeed evident. Consumers seem to be smarter than producers that have ever been assumed. 5 years within next, potential customers would then prefer buying cars from institutions that care about either the ecological footprint, not even just investment rewards, and even provide individuals the increased opportunity of going so much from public equipment thru the equipment made.Think about the television programs and films you've seen recently in which business was portrayed in some way. How were business and business people portrayed
Answer:
I have recently watched a movie which portrayed the businessmen. The businessmen was involved in unethical activities to make unfair profits. The main motive of the businessmen was to make excessive profits to maintain his luxury lifestyle and he was not concerned with the harms that was caused by the toxic waste which was released in the environment.
Explanation:
The management was concerned about the going concern status of the business as the government may impose fines and heavy penalties on the business which could cease business activities. But the businessmen was not concerned with the management advice.
If the percentage increase in the quantity supplied equals the percentage increase in the price, the supply:
Answer: is unit elastic
Explanation:
If the percentage increase in the quantity supplied equals the percentage increase in the price, the supply will be said to be unit elastic.
In the unit elastic supply, it should be noted that supply responds perfectly to the changes in price. This simply means that there'll be an equal change between the price change and the quantity that is supplied.
The annual report of Oracle Corporation included the following information relating to their allowance for doubtful accounts: Balance in allowance at the beginning of the year $323 million, accounts written off during the year of $145 million, balance in allowance at the end of the year $296 million. What did Oracle Corporation report as bad debt expense on the income statement for the year
Answer:
Oracle Corporation reported $118 million as bad debt expense on the income statement for the year.
Explanation:
This can be calculated using the following formula:
Balance in allowance at the end of the year = Balance in allowance at the beginning of the year + Bad debt expense - Accounts written off during the year ......................... (1)
Where:
Balance in allowance at the end of the year = $296 million
Balance in allowance at the beginning of the year = $323 million
Bad debt expense = ?
Accounts written off during the year = $145 million
Substituting the values into equation (1) and solve for Bad debt expense, we have:
$296 million = $323 million + Bad debt expense - $145 million
Bad debt expense = $296 million - $323 million + $145 million
Bad debt expense = $118 million
Therefore, Oracle Corporation reported $118 million as bad debt expense on the income statement for the year.
Testing the probability of a relationship between variables occurring by chance alone if there really was no difference in the population from which that sample was drawn is known as:
a.Chi-square test
b.Significance testing
c.Multiple regression analysis
d.Correlation coefficient
Answer:
b.significance testing is answer.
Explanation:
I hope it's helpful!
The process of determining the likelihood of a link between variables arising by chance alone if there was no difference in the population from which the sample was selected is called as Significance testing. Thus, option (b) is correct.
What is probability?Probability is an area of mathematics that deals with numerical representations of how probable an event is to occur or how likely a statement is to be true. The probability of an occurrence is a number between 0 and 1, where 0 denotes the event's impossibility and 1 represents certainty.
A test of significance is a formal technique for comparing observable facts to a claim (also known as a hypothesis) whose veracity is being evaluated. A claim is a statement concerning a parameter, such as the population percentage p or population mean. Therefore, it can be concluded that option (b) is correct.
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Suppose that a sales consulting firm notices a correlation between the sale of house paint and number of home sales in an area. As the number of home sales increases, the sale of house paint increases, and vice versa. The consulting firm concludes that buying a home causes the new owners to purchase house paint. What method did the consulting firm use in drawing this conclusion
Answer:
The consulting firm used reasoning to draw the conclusion.
Explanation:
Reasoning refers to the process of using information that we are given (sale of house paint), compare it to what we already know (the number of home sales in an area), and then come up with a conclusion, like "buying a home causes the new owners to purchase house paint." It is sometimes described as deductive reasoning.
The Alpine House, Inc., is a large retailer of snow skis. The company assembled the information shown below for the quarter ended March 31:
Amount Sales $1,188,000
Selling price per pair of skis $440
Variable selling expense per pair of skis $47
Variable administrative expense per pair of skis $20
Total fixed selling expense $155,000
Total fixed administrative expense $105,000
Beginning merchandise inventory $75,000
Ending merchandise inventory $120,000
Merchandise purchases $310,000
Required:
a. Prepare a traditional income statement for the quarter ended March 31.
b. Prepare a contribution format income statement for the quarter ended March 31.
c. What was the contribution margin per unit?
Answer:
a) traditional format income statement
Sales revenue $1,188,000
COGS ($355,000)
Gross profit $833,000
Expenses:
Selling expenses $281,900Administrative expenses $159,000 ($440,900)Operating income $392,100
b) contribution format income statement
Sales revenue $1,188,000
Variable costs:
COGS $355,000Selling expense $126,900Administrative expense $54,000 ($535,900)Contribution margin $652,100
Fixed expenses:
Selling expenses $155,000Administrative expenses $105,000 ($260,000)Operating income $392,100
c) contribution margin per unit = $652,100 / 2,700 units = $241.52
