Corp makes flashlights and is considering raising the price by 75 cents a unit for the coming year. With a 75-centprice increase, demand is expected to fall by 7,000 units.Current75,000 units$8.50$4.80Projected68,000 units$9.25$4.80DemandSelling priceIncremental cost per unit14) If the price increase is implemented, operating income is projected to

Lets understand the basics. Management needs to make decision to change either price structure or…

Answered: Corp makes flashlights and is…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Sales of Mini Mochi Munch Complete the table below: (Round to the nearest dollar.) Incremental Earnings Forecast Kokomochi is considering the launch of an advertising campaign for its latest dessert product, the Mini Mochi Munch. Kokomochi plans to spend $5.8 million on TV, radio, and print advertising this year for the campaign. The ads are expected to boost sales of the Mini Mochi Munch by $10.3 million this year and $8.3 million next year. In addition, the company expects that new consumers who try the Mini Mochi Munch will be more likely to try Kokomochi's other products. As a result, sales of other products are expected to rise by $2.2 million each year. Kokomochi's gross profit margin for the Mini Mochi Munch is 39%, and its gross profit margin averages 22% for all other products. The company's marginal corporate tax rate is 21% both this year and next year. What are the incremental earnings associated with the advertising campaign? Other Sales Cost of Goods Sold Gross Profit…
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flash city inc manufactures small flash drives and is considering raising the price by 75 cents a unit for the coming year. With a 75 -cent price increase demand is expected to fall 7000 units. Demand 76,000 units 69,000 units Selling price $8.75 $9.50 Incremental cost per unit $4.80 $4.80 Would you recommend the 75 - cent price increase?
A maker of mechanical systems can reduce product recalls by 25% if it purchases new packaging equipment. The cost of the new equipment is expected to be $40,000 four years from now. How much could the company afford to spend now, instead of 4 years from now, if it uses a minimum attractive rate of return of 12% per year?
quick computing currently sells 7 million computer chips each year at a price of $12 per chip. It is about to introduce a new chip, and it forecasts annual sales of 22 million of these improved chips at a price of $15 each. However, demand for the old chip will decrease, and sales of the old chip are expected to fall to 1 million per year. The old chips cost $6 each to manufacture, and the new ones will cost $10 each. What is the proper cash flow to use to evaluate the present value of the introduction of the new chip?
Aylmer-in-You (AIY) Inc. projects unit sales for a new opera tenor emulation implant as follows: Year Unit Sales 1 101,000 2 115,000 3 125,000 4 145,000 5 90,000 Production of the implants will require $753,000 in net working capital to start and additional net working capital investments each year equal to 15% of the projected sales increase for the following year. (Because sales are expected to fall in Year 5, there is no NWC cash flow occurring for Year 4.) Total fixed costs are $177,000 per year, variable production costs are $309 per unit, and the units are priced at $360 each. The equipment needed to begin production has an installed cost of $10.0 million. Because the implants are intended for professional singers, this equipment is considered industrial machinery and thus falls into Class 8 for tax purposes (20%). In five years, this equipment can be sold for about 20% of its acquisition cost. AIY is in the 40% marginal tax bracket and has a required…
A firm is considering several policy changes to increase sales. It will increase inventory by $10,000 it will offer more liberal sales terms but will result in average receivables increasing by $65,000. These actions are expected to increase sales by $800,000 per year, and cost of goods will remain at 80% of sales. Because of the firm’s increased purchase of its won production needs, average payable increases by $35,000.What factors should they consider when making these decisions? What effects would they have on the firm’s cash cycle? Please select three financial ratios they should consider and why
A company wants to expand by offering a new product. Expected cost and revenue data for this product are: Annual sales 5,000 units Unit selling price ? Unit variable costs: Production $ 30.20 Selling 6. Incremental fixed costs per year: 32:16 Production $35,000 Selling $45,000 If the company adds this new product, sales of its other product lines will be impacted, causing the contribution margin of other product lines to drop by $18,500 per year. What is the lowest price the company could charge for its new product without affecting the company's total profits? Multiple Choice $39.90 $52.20
Minden Co. is considering buying new computer software that will assist customers in their product choices. The cost is $50,000. The benefit will be an additional cash inflow of $25,000 for four years, at which point the software will need replacing with a more modern version. The return on average investment is _______________. Question 15 options: 25.0% none of the options 42.5% 50.0% 30.0%

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