I need answer of this question solution general accounting Mountain Home Systems, Inc. is a well-known and reputablesupplier of integrated circuits to manufacturers oftelecommunications devices. The firm is currently debatingwhether to expand its sales to car-telephone manufacturers.While the firm expects an extra $2 million in sales if it enters thismarket, it also knows that 15% of its sales will ultimately beuncollectible. In addition, collection costs will be 2% on all newsales and the firm's production and selling costs are 80% of sales.Mountain Home's tax rate is 30%.a) Calculate Mountain Home's additional net income.b) If Mountain Home can turn its receivables over 4 times peryear, what will its additional investment in accounts receivable beand what will the firm earn as an after-tax return on thatinvestment?

Part A: Additional Net IncomeMountain Home Systems expects additional sales of $2,000,000. However,…

Answered: Mountain Home Systems, Inc. is a…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter17: The Management Of Cash And Marketable Securities

Section: Chapter Questions

Problem 5P

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Seattle Radiology Group plans to invest in a new CT scanner. The group estimates $1,500 net revenue per scan. Preliminary market assessments indicate that demand will be less than 5,000 scans per year. The group is considering a scanner (Scanner B) that would result in total fixed costs of $800,000 and would yield a profit of $450,000 per year at a volume of 5,000 scans. What is the estimated breakeven volume (in number of scans) for Scanner B?
Techno Ltd manufactures components for laptop computers. One of its top selling products is the new solid-state drive, the Solix, which will offer improved speed and performance. Earlier this year, a Taiwanese company entered the market offering a similar drive at a price 10% below the Solix price of $400 per unit. Techno Ltd is currently achieving its target profit margin of 30% on all of its products. Required: 1. What target cost would have to be set for the Solix drive to remain competitive and meet the requirements of the company’s target profit margin? 2. Calculate the cost reduction objective. 3. Outline two cost management techniques Techno Ltd could apply to achieve the cost reduction objective.
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