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The level of inventory of a manufactured product has increased by 7,000 units during a period. The following data are also available: Variable Fixed Unit manufacturing costs of the period $12.00 $6.00 Unit operating expenses of the period 4.00 1.50 What would be the effect on income from operations if absorption costing is used rather than variable coding? a. $42,000 decrease b. $42,000 increase €$62,500 increase d. $52,500 decrease During the year just ended, Roberts Company's income under absorption costing was $3,000 lower than its income under variable costing. The company sold 9,000 units during the year, and its variable costs were $9 per unit, of which $3 was variable selling expense. If production cost is $11 per unit under absorption costing every year, how many units did the company produce during the year? Price Earnings Ratio Three years ago, you founded Outdoor Recreation, Inc., a retailer specializing in the sale of equipment and clothing for recreational activities such as camping, sling and hiking. So far, your company has gone through three funding rounds Round Dats Investor Series A Feb. 2008 You Series B Aug 2009 Angela Shara Share Price (3) 700,000 150 1,000,000 150 Series C Sept. 2010 Venture Capital 2,200,000 2.50 It is now 2011 and you need to raise additional capital to expand your business. You have decided to take your fint public through an IPO. You would like to issue an additional 55 million new shares through this IPO. Assuming that your firm successfully completes its IPO, you forecast that 2011 net income will be $ 8.5million. Your investment banker advises you that the prices of other recent IPOs have been set such that the P/E ration based on 2011 forecasted earnings average 20.4 aug that your IPO is set at a price that implies a similar multiple, what will be your IPO price per share?

The level of inventory of a manufactured product has increased by 7,000 units during a period. The following data are also available: Variable Fixed Unit manufacturing costs of the period $12.00 $6.00 Unit operating expenses of the period 4.00 1.50 What would be the effect on income from operations if absorption costing is used rather than variable coding? a. $42,000 decrease b. $42,000 increase €$62,500 increase d. $52,500 decrease During the year just ended, Roberts Company's income under absorption costing was $3,000 lower than its income under variable costing. The company sold 9,000 units during the year, and its variable costs were $9 per unit, of which $3 was variable selling expense. If production cost is $11 per unit under absorption costing every year, how many units did the company produce during the year? Price Earnings Ratio Three years ago, you founded Outdoor Recreation, Inc., a retailer specializing in the sale of equipment and clothing for recreational activities such as camping, sling and hiking. So far, your company has gone through three funding rounds Round Dats Investor Series A Feb. 2008 You Series B Aug 2009 Angela Shara Share Price (3) 700,000 150 1,000,000 150 Series C Sept. 2010 Venture Capital 2,200,000 2.50 It is now 2011 and you need to raise additional capital to expand your business. You have decided to take your fint public through an IPO. You would like to issue an additional 55 million new shares through this IPO. Assuming that your firm successfully completes its IPO, you forecast that 2011 net income will be $ 8.5million. Your investment banker advises you that the prices of other recent IPOs have been set such that the P/E ration based on 2011 forecasted earnings average 20.4 aug that your IPO is set at a price that implies a similar multiple, what will be your IPO price per share?

Principles of Accounting Volume 1
Principles of Accounting Volume 1
19th Edition
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax
Chapter10: Inventory
Section: Chapter Questions
Problem 1PB: When prices are falling (deflation), which costing method would produce the highest gross margin for...
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The level of inventory of a manufactured product has increased by 7,000 units during a period. The following data are also available: Variable Fixed Unit manufacturing costs of the period $12.00 $6.00 Unit operating expenses of the period 4.00 1.50 What would be the effect on income from operations if absorption costing is used rather than variable coding? a. $42,000 decrease b. $42,000 increase €$62,500 increase d. $52,500 decrease During the year just ended, Roberts Company's income under absorption costing was $3,000 lower than its income under variable costing. The company sold 9,000 units during the year, and its variable costs were $9 per unit, of which $3 was variable selling expense. If production cost is $11 per unit under absorption costing every year, how many units did the company produce during the year? Price Earnings Ratio Three years ago, you founded Outdoor Recreation, Inc., a retailer specializing in the sale of equipment and clothing for recreational activities such as camping, sling and hiking. So far, your company has gone through three funding rounds Round Dats Investor Series A Feb. 2008 You Series B Aug 2009 Angela Shara Share Price (3) 700,000 150 1,000,000 150 Series C Sept. 2010 Venture Capital 2,200,000 2.50 It is now 2011 and you need to raise additional capital to expand your business. You have decided to take your fint public through an IPO. You would like to issue an additional 55 million new shares through this IPO. Assuming that your firm successfully completes its IPO, you forecast that 2011 net income will be $ 8.5million. Your investment banker advises you that the prices of other recent IPOs have been set such that the P/E ration based on 2011 forecasted earnings average 20.4 aug that your IPO is set at a price that implies a similar multiple, what will be your IPO price per share?
Transcribed Image Text:The level of inventory of a manufactured product has increased by 7,000 units during a period. The following data are also available: Variable Fixed Unit manufacturing costs of the period $12.00 $6.00 Unit operating expenses of the period 4.00 1.50 What would be the effect on income from operations if absorption costing is used rather than variable coding? a. $42,000 decrease b. $42,000 increase €$62,500 increase d. $52,500 decrease During the year just ended, Roberts Company's income under absorption costing was $3,000 lower than its income under variable costing. The company sold 9,000 units during the year, and its variable costs were $9 per unit, of which $3 was variable selling expense. If production cost is $11 per unit under absorption costing every year, how many units did the company produce during the year? Price Earnings Ratio Three years ago, you founded Outdoor Recreation, Inc., a retailer specializing in the sale of equipment and clothing for recreational activities such as camping, sling and hiking. So far, your company has gone through three funding rounds Round Dats Investor Series A Feb. 2008 You Series B Aug 2009 Angela Shara Share Price (3) 700,000 150 1,000,000 150 Series C Sept. 2010 Venture Capital 2,200,000 2.50 It is now 2011 and you need to raise additional capital to expand your business. You have decided to take your fint public through an IPO. You would like to issue an additional 55 million new shares through this IPO. Assuming that your firm successfully completes its IPO, you forecast that 2011 net income will be $ 8.5million. Your investment banker advises you that the prices of other recent IPOs have been set such that the P/E ration based on 2011 forecasted earnings average 20.4 aug that your IPO is set at a price that implies a similar multiple, what will be your IPO price per share?
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