YARN, Ltd. was approached by a sales representative who offered to sell a key component of YARN's primary product for $28 per unit. YARN's per unit costs to make the component were: direct materials $10; direct labor $6; variable overhead $8; fixed overhead $5; variable selling $2; fixed selling and administrative $8. Assume that all variable costs are avoidable if the component is bought but all fixed costs are unavoidable. For blank one, calculate the per unit net benefit or cost of BUYING the component. For blank two, assume that a $5 per unit OPPORTUNITY COST exists if the component is made. Recalculate the net per unit cost or benefit of BUYING the product with the opportunity cost. Blank # 1 Blank # 2
Cost of Debt, Cost of Preferred Stock
This article deals with the estimation of the value of capital and its components. we'll find out how to estimate the value of debt, the value of preferred shares , and therefore the cost of common shares . we will also determine the way to compute the load of every cost of the capital component then they're going to estimate the general cost of capital. The cost of capital refers to the return rate that an organization gives to its investors. If an organization doesn’t provide enough return, economic process will decrease the costs of their stock and bonds to revive the balance. A firm’s long-run and short-run financial decisions are linked to every other by the assistance of the firm’s cost of capital.
Cost of Common Stock
Common stock is a type of security/instrument issued to Equity shareholders of the Company. These are commonly known as equity shares in India. It is also called ‘Common equity
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