New contribution margin = $70 Break-even point in passengers = fixed costs/contribution margin Passengers = 45,000 Train cars = 715 e) Springfield Express has experienced an increase in variable cost per passenger to $ 85 and an increase in total fixed cost to $ 3,600,000. The company has decided to raise the average fare to $ 205. If the tax rate is 30 percent, how many passengers per month are needed to generate an after-tax profit of $ 750,000? Before Tax Needed Profit = $1,071,428.57 Before Tax Needed Contribution Margin = $4,671,428.57 Contribution Margin per Customer = $120 Number of Customers Needed = 38,928.57 Whole Number of Customers Needed = 38,929
The relationship between marginal revenue and total revenue is the change in total revenue with respect to the variable change in quantity. Marginal revenue = demand MR = d(TR)/dQ, where Q is quantity. For each additional unit of output sold total revenue increases but only by the amount equal to the marginal price of the output unit. • As we increase the number of units sold which generate a positive marginal revenue, the total revenue increases (The total revenue increases when marginal revenue is positive) • When marginal revenue is zero the total revenue does not change and the total revenue is maximum (When MR = 0, TR Δ = 0) B. Define marginal cost Marginal cost is the total cost to produce an additional unit of goods sold.
Compare your company’s profitability ratios with the peer company profitability ratios. 10. Compare the profitability ratios for four competitors. I. Chapter 9 Required 1. Review the earnings per share forecasts.
The gross profit ratio (gross profit divided by net sales) also indicates how well selling prices provide for expenses in an organization (Kimmel, Weygandt, & Kieso, 2009). The return on assets ratio (net income divided by average total assets) indicates how well an organization employs its assets. The asset turnover ratio (net sales divided by average total assets) further indicates asset utilization to produce sales (Kimmel, Weygandt, & Kieso, 2009). TRI profitability ratios are presented in Table Three, below. Ratio analysis for TRI illustrates conservative debt levels and ability to service additional debt.
Define the price elasticity of demand and show how it is calculated. Answer: The units-free measure of the responsiveness of the quantity demanded of a good to a change in it s price when all other influences on buying plans remain the same. 3. What is the total revenue test? Explain how it works.
Maximizing profit which means total revenue minus total goal is a competitive firm’s goal. The competitive firm takes the market price given and then chooses how much supply is needed so that a sales price can be determined for profit. The monopoly firm determines their price on the quantity of products to sell. The monopoly decides how much of its product to make and what price to charge for it. Individual financial gain determines the price for oligopolies.
Throughput is the rate at which the system generates money through sales while inventory is all the money that the system has invested in purchasing things which it intends to sell. And operational expense is all the money the system spends in order to turn inventory into throughput. In traditional meaning, throughput is defined as the rate at which the system generates money through production whereas inventory includes the direct labour cost invested on the products and operational expense is all the money the system spends in order to turn inventory into throughout. I found the new definition is useful because it eliminates the confusion over whether the money spent is an investment or an expense . 2.
This view indicates supply will never change to adjust to meet consumer spending. The demand can move by changes and the produced items change in price to match consumer spending. The Keynesian economics looks at the problem of supply and demand separately. Basically, supply generates income. What people make other people buy, and so the value of supply is always equal to the value of income.
Explain the problem(s) associated with the labor productivity. Quantity $/Unit Deluxe car 4,000 units sold $8,000/car Limited car 6,000 units sold $9,500/car Labor. Deluxe 20,000 hours $12/hour Labor. Limited 30,000 hours $14/hour Solution: Firstly, we use the single-factor productivity for measuring productivity as explained below: The labor productivity (in hours) for Deluxe car: Units sold = 4,000 = 0.2 units per labor hour. Labor hours 20,000 The labor productivity (in hours) for Limited car: Units sold = 6,000 = 0.2 units per labor hour.
Whitbread PLC is led by a chief executive officer, along with the Group Finance Director and the Company Secretary they form the Main Board Committee, which in addition to the non-executives of the Board, form the ultimate decision making authority within the management structure. Reference: http://www.whitbread.co.uk/ Profit and Loss account A profit and loss account shows how much profit or loss that a business has made over a reported period of time. It measures a company’s sales revenue and expenses over a period, providing a calculation of profits and losses during that time. The uses of a profit and loss account The main use of a profit and loss account