Blinds N Such is considering a merger with Window Supply Stores. Blinds' total operating costs of producing services are $750,000 for sales volume of $6 million. Window's total operating costs of producing services are $100,000 for a sales volume (JP) of $1 million. Calculate the average cost of production for the Blinds and Window firms, respectively.
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Blinds N Such is considering a merger with Window Supply Stores. Blinds' total operating costs of producing services are $750,000 for sales volume of $6 million. Window's total operating costs of producing services are $100,000 for a sales volume (JP) of $1 million. Calculate the average cost of production for the Blinds and Window firms, respectively.
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- Key Corporation is considering the addition of a new product. The expected cost and revenue data for the new product are as follows: Annual sales 2,500 units Selling price per unit $ 304 Variable costs per unit: Production $ 125 Selling $ 49 Avoidable fixed costs per year: Production $ 50,000 Selling $ 75,000 Allocated common fixed corporate costs per year $ 55,000 If the new product is added, the combined contribution margin of the other, existing products is expected to drop $65,000 per year. Total common fixed corporate costs would be unaffected by the decision of whether to add the new product.At what selling price would the new product be just breaking even? $232 per unit $282 per unit $250 per unit $246 per unitB. C. D&R Corporation has annual revenues of $375,000, an average contribution margin ratio of 32%, and fixed expenses of $150,000. Required: a. Management is considering adding a new product to the company's product line. The new item will have $9.52 of variable costs per unit. Calculate the selling price that will be required if this product is not to affect the average contribution margin ratio. b. If the new product adds an additional $26,880 to D&R's fixed expenses, how many units of the new product must be sold at the price calculated in part a to break even on the new product? c. If 16,000 units of the new product could be sold at a price of $15.50 per unit, and the company's other business did not change, calculate D&R's total operating income and average contribution margin ratio. Complete this question by entering your answers in the tabs below. Required A Required B Management is considering adding a new product to the company's product line. The new item will have $9.52 of…SOWSEY Company is considering the addition of a new product to its current product lines. The expected cost and revenue data for the new product are as follows: Annual Sales 2,500 units Selling Price per unit P304 Variable Costs per unit: Production P125 Selling P49 Avoidable fixed costs per year: Production P50,000 Selling P75,000 Allocated common corporate costs per year P55,000 If the new product is added, the combined contribution margin of the other existing products lines is expected to drop P65,000 per year. Total common corporate costs would be unaffected by the decision of whether to add the new product. What is the lowest selling price per unit that could be charged for the new product line and still make an additional P2 income per unit?
- Enviro-Tech’s management decides to allocate all corporate-sustaining costs to distribution channels: $38 million to the wholesale channel and $10 million to the retail channel. As a result, distribution channel costs are now $71 million ($33 million + $38 million) for the wholesale channel and $22 million 1$12 million + $10 million) for the retail channel. Calculate the distribution-channel-level operating income. On the basis of these calculations, what actions, if any, should Enviro-Tech’s managers take? Explain.Amalgamated Fenderdenter’s sales are $10 million. The company spends $3.5 millionfor purchase of direct materials and $2.5 million for direct labor; overhead is $3.5 millionand profit is $500,000. Direct labor and direct material vary directly with sales, butoverhead does not. The company wants to double its profit.a. By how much should the firm increase annual sales?b. By how much should the firm decrease material costs?c. By how much should the firm decrease labor cost?D&R Corp. has annual revenues of $262,000, an average contribution margin ratio of 33%, and fixed expenses of $101,800. Required: a. Management is considering adding a new product to the company's product line. The new item will have $8.7 of variable costs per unit. Calculate the selling price that will be required if this product is not to affect the average contribution margin ratio. b. If the new product adds an additional $29,100 to D&R's fixed expenses, how many units of the new product must be sold at the price calculated in part a to break even on the new product? c. If 20,900 units of the new product could be sold at a price of $14.2 per unit, and the company's other business did not change, calculate D&R's total operating income and average contribution margin ratio. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required A Required B Required C If 20,900 units of the new product could be sold at a price of…
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- Ouzts Corporation is considering Alternative A and Alternative B. Costs associated with the alternatives are listed below: $ 57,100 Materials costs Processing costs $ 37,900 Equipment rental $ 13,300 Occupancy costs $ 22,500 What is the financial advantage (disadvantage) of Alternative B over Alternative A? Multiple Choice O $(23,300) $107,500 $130,800 Alternative A Alternative B $ 41,000 $ 37,900 $(119,150) $ 13,300 $ 15,300Delsing Canning Company is considering an expansion of its facilities. Its current income statement is as follows: $ 7,500,000 3,750,000 2,050,000 $ 1,700,000 700,000 1,000,000 $ 350,000 $ 650,000 450,000 1.44 Sales Variable costs (50% of sales) Fixed costs Earnings before interest and taxes (EBIT) Interest (10% cost) Earnings before taxes (EBT) Tax (35%) Earnings after taxes (EAT) Shares of common stock Earnings per share The company is currently financed with 50% percent debt and 50% percent equity (common stock, par value of $10). In order to expand the facilities, Mr. Delsing estimates a need for $4.5 million in additional financing. His investment banker has laid out three plans for him to consider: 1. Sell $4.5 million of debt at 9 percent. 2. Sell $4.5 million of common stock at $15 per share. 3. Sell $2.25 million of debt at 8 percent and $2.25 million of common stock at $20 per share. Variable costs are expected to stay at 50 percent of sales, while fixed expenses will…Olinde Electronics Inc. producesstereo components that sell at P= $100 per unit. Olinde’s fixed costs are $200,000, variable costs are $50 per unit, 5,000 components are produced and sold each year, EBIT is currently $50,000, and Olinde’s assets (all equity-financed) are $500,000. Olinde can change itsproduction process by adding $400,000 to assets and $50,000 to fixed operating costs. Thischange would (1) reduce variable costs per unit by $10 and (2) increase output by 2,000units, but (3) the sales price on all units would have to be lowered to $95 to permit sales ofthe additional output. Olinde has tax loss carry-forwards that cause its tax rate to be zero,it uses no debt, and its average cost of capital is 10%.a. Should Olinde make the change? Why or why not?b. Would Olinde’s break-even point increase or decrease if it made the change?c. Suppose Olinde was unable to raise additional equity financing and had to borrow the$400,000 at an interest rate of 10% to make the investment. Use…