Do not use Ai Margaret earns a bonus set at 5% of her product line's actual operating income. How much is she currently expecting for herbonus? If sales in the chrome line and the iron line turn out as expected, how much will Margaret's bonus be if the crystal line isdropped?Current expected bonus$Bonus if the crystal line is dropped$eTextbook and Media Margaret earns a bonus set at 5% of her product line's actual operating income. How much is she currently expecting for herbonus? If sales in the chrome line and the iron line turn out as expected, how much will Margaret's bonus be if the crystal line isdropped?Current expected bonus$Bonus if the crystal line is dropped$eTextbook and Media

Step 1:Current operating income = 243000-103000+183000 =323000If Crystal is dropped operating income…

Answered: Margaret earns a bonus set at 5% of her…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter14: Capital Structure Management In Practice

Section14.A: Breakeven Analysis

Problem 6P

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Shonda & Shonda is a company that does land surveys and engineering consulting. They have an opportunity to purchase new computer equipment that will allow them to render their drawings and surveys much more quickly. The new equipment will cost them an additional $1.200 per month, but they will be able to increase their sales by 10% per year. Their current annual cost and break-even figures are as follows: A. What will be the impact on the break-even point if Shonda & Shonda purchases the new computer? B. What will be the impact on net operating income if Shonda & Shonda purchases the new computer? C. What would be your recommendation to Shonda & Shonda regarding this purchase?
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RU Listening manufactures cell phones and is developing a new model with a feature (targeted at parents of teens) that prevents the phone from dialing an owner-defined list of phone numbers between the hours of midnight and 6:00 a.m. The new phone model has a target price of $360. Management requires a 10% profit on new product revenues. Required: If required, round to the nearest dollar. 1. Calculate the amount of desired profit. 24 2. Calculate the target cost.
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the use of "high powered" quarterly sales commissions, used by virtually every firm that sells software. A typical incentive compensation scheme (as a function of sales) is highly convex: a sales person earns 2% if she sells $100,000 worth of software; 5% if $500,000; 8% if $1,000,000, ..., up to 25% if $8,000,000.Ian finds that these high-powered (convex) compensation schedules give salespeople an incentive to "bunch" sales into the same quarter. Just as convex production costs can be reduced by "smoothing", i.e., holding inventories to buffer sales shocks, so too can convex commissions be increased by "bunching" sales into the same quarter, the opposite of "smoothing."Using proprietary data from a large vendor he finds that 75% of sales are occurring on the last day of the quarter; and 5% of sales occur on the first day of the quarter, as salespeople give discounts to customers to accelerate or delay purchases. These discounts cost the firm about 7% of revenue, which is about the…
Skip Consulting helped Schmidt Roofers put various cost saving techniques into place. Thecontract specifies that Skip will receive a flat fee of $70,000 and an additional $19,000 if Schmidtattains a target amount of cost savings. Skip estimates a 20% chance that Schmidt will reach thetarget for cost savings. Assuming that Skip uses the expected-value approach, what is thetransaction price for this product?a. $19,000b. $70,000c. $73,800d. $89,000
Break-even Analysis Example Imagine that you want to launch a new business selling a smartphone app. You make the following assumptions about your costs and revenue. The expected average selling price = $7. Estimated fixed costs = $75,000 (this is enough to cover your salary and pay for a small office). These costs will not change with the number of apps sold. Variable costs = $0.50 (these are the transaction fees you need to pay on each sale). (1) Armed with this information, calculate the break-even point in units: (2) To earn a profit of 5%, how many units do you need to sell? (3) What if you were able to reduce the estimated fixed cost to $65,000, what would your new break-even be in units? (4) What if you missed the mark on variable costs and the actual variable costs are $1.15, what would your break-even be in units?
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Current Attempt in Progress Natalie is busy establishing both divisions of her business (cookie classes and mixer sales) and completing her business degree. Her goals for the next 11 months are to sell one mixer per month and to give two to three classes per week. The cost of the fine European mixers is expected to increase. Natalie has just negotiated new terms with Kzinski that include shipping costs in the negotiated purchase price (mixers will be shipped FOB destination). Assume that Natalie has decided to use a periodic inventory system and now must choose a cost flow assumption for her mixer inventory. The following transactions occur in February to May 2022. Feb. 2 16 25 Mar. 2 30 31 Apr. 1 13. 30 May 4 27 Natalie buys two deluxe mixers on account from Kzinski Supply Co. for $1,170 ($585 each), FOB destination, terms n/30. She sells one deluxe mixer for $1.100 cash. She pays the amount owed to Kzinski. She buys one deluxe mixer on account from Kzinski Supply Co. for $603, FOB…

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