Davis Corporation manufactures and sells portable radios. The radio sells for $70.00 per unit and its variable costs per unit are $30.00. Fixed costs are $51,000 per month for sales volumes up to 25,000 radios. If more than 25,000 radios are sold, the fixed costswill be $51,000 The flexible budget would reflect what monthly operating income for a sales volume of 39,000 radios?A. $1,560,000B $51,000C. $2,730,000D. $1,509,000

Answered: Davis Corporation manufactures and…

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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United Snack Company sells 50-pound bags of peanuts to university dormitories for $5 a bag. The fixed costs of this operation are $60,000, while the variable costs of peanuts are $.5 per pound. a. What is the break-even point in bags? b. Calculate the profit or loss on 18,000 bags. c. What is the degree of operating leverage at 20,000 bags ? d. If United Snack Company has an annual interest expense of $10,000, and EBIT $80.000, calculate the degree of financial leverage at 18,000. e. What is the degree of combined leverage at both sales level
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Subject: Finance A computer company has a monthly advertising budget of $60,000. Your sales department estimates that if x dollars are spent each month in newspaper advertising and and dollars each month in television advertising, the monthly sales will be given in dollars. If the utility is 10% of sales less the cost of advertising; determines how to assign the advertising budget to maximize production. Solve it with Lagrange Multipliers
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