Answered: If profit is maximum at sales of 700…

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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Similar questions

If a company has three lots of products for sale, purchase 1 (earliest) for $17, purchase 2 (middle)for $15, purchase 3 (latest) for $12, which of the following statements is true?A. This is an inflationary cost pattern.B. This is a deflationary cost pattern.C. The next purchase will cost less than $12.D. None of these statements can be verified
Would an increase in per-unit selling price cause a company’s break-even point to increase or decrease? Why?
1. Which action would not lower a company's break-even point? O increase selling prices () reduce variable costs () decrease fixed costs ) sell more units O answer not given O O O OO
“Since break even analysis focuses on making Zero profit, it is of no value in determining the units a company must sell to earn a targeted profit”, Do you agree or disagree with this statement? Why or why not?
Corning’s market value was below its book value because it was facing pricing pressure in the market, which reduced its ROIC. What are some ways to tell if pricing pressure is temporary – and if a company should wait it out – or permanent, and the company should consider shutting down?
Capital Motors, a car dealership, recently announced that itwill rely less on high-volume strategies such as discounts andrebates to improve its profitability. Another strategy it willemploy is to sell fewer cars to rental fleets, which eventuallyreturn the cars to Capital for sale at low auction prices. Howdo these types of sales affect Capital’s profitability?
Help question 30
A firm that uses LIFO accounting for inventory in times of rising investory costs will always report lower profit margins than if it used FIFO. Is this correct?
Since break-even analysis focuses on making zero profit, it is of no value in determining the units a firm must sell to earn a targeted profit. Do you agree or disagree with this statement? why?
21 A company's current ratio is 2.0, and its acid-test ratio is 1.0. How will these ratios be affected if the company pays cash to purchase inventory? The acid-test ratio will decrease, but the current ratio will not change. The current ratio will decrease, but the acid-test ratio will not change. O Both the current and acid-test ratios will decrease. O Neither the current ratio nor the acid-test ratio will change.
Why would a company’s manager be concerned about the quantity of its purchases returns if its suppliers allow unlimited returns?
answer these question in just two sentences. a..“If a firm sold some inventory on credit, its current ratio would probably not change much, but its quick ratio would increase.” If it is possible give reason in two sentences. b. In general, it's better to have a low inventory turnover ratio than a high one, as a low ratio indicates that the firm has an adequate stock of inventory relative to sales and thus will not lose sales as a result of running out of stock. If it is false give reason in two sentences. c. “It is appropriate to use the fixed assets turnover ratio to appraise firms' effectiveness in managing their fixed assets if and only if all the firms being compared have the same proportion of fixed assets to total assets.” If you are not agreed with this statement give justification in two sentences.

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If profit is maximum at sales of 700 units, does the firm have no choice but to limit sales at this level?