If the sales outlook for the coming three years was only 20,000,000 and B.E. continued producing at the rate of 30,000,000 units, a total of 10,000,000 units would be dumped into ending inventory at the end of each year once again reducing costs of goods sold and falsely increasing income. By the end of year 2013, B.E. Company would have 35,000,000 units sitting in ending inventory taking up space and costing money to store. Once again if the president’s bonus is based off of net income, this situation is the most favorable for a high paying bonus and encourages stockpiling inventory to inflate net income.
Net income rose from ($8,000) to ($2,000) which cut losses by $6,000. Losses were cut by 75%. 2. A firm needs $800 to start and has the following expectations: Sales $1,600 Expenses $1,450 Tax rate 33% of earnings a. What are earnings if the owners invest (use their own money) for the $800 needed to start?
How much total income tax will Custom Craft Services and Jaron pay (combining both corporate and shareholder level tax) on the $200,000 of income if CCS pays Jaron a salary of $150,000 and distributes its remaining after-tax earnings to Jaron as a dividend? c. Why is the answer to part b lower than the answer to part a? ?
What assumptions can you use to arrive approximately at the share price of $273,000 that was estimated by the dissenting shareholders? Show how these assumptions impact your valuation. 4. What is the maximum share price at which Herbert Kohler should be willing to settle with the dissenting shareholders in order to stop the trial on April 11, 2000? Assume that (i) if the trial proceeds it is expected to last less than a month and result in two possible outcomes in terms of the price per share established in court: the $273,000 claimed by the plaintiffs, or the $55,400 being defended by Herbert Kohler; (ii) Kohler estimates the probabilities of these outcomes at 30% and 70%, respectively.
These changes will add $1.00 per bottle to the variable cost of sales. Calculate the new break even given the increase in variable costs. After charging $1.00 more per bottle, the company would have to sell 1,600 bottles per day which would be 20% sales loss. 3. To reposition its water as a premium product, Healthy Spring will require an increase in its advertising and promotion budget of $900 daily.
,Sarah L. G January 6, 2013 Written Assignment #1 1. A) $1,000 with 5% interest after 10 years gives you $1,628. Therefore, you would gain $628 in interest. B) If the interest is withdrawn each year, a total of $500 would be earned because the $1,000 investment would earn $50 of simple interest each year. C) The answers are different because if the interest is left untouched, it makes the principal amount higher each year, giving more money after 10 years.
The accounts payable at the Fiscal Year End increased by almost 200%. You should as mentioned in the paragraph above use these additional funds to reduce the payables and to be able to take advantage of the accounts from your supplies. Also you purchased items for your inventory with installment payments made available to you from your suppliers. What I recommend is that not to purchase items with an installment plan but to purchase less items and take the discounts by paying for the items within the time period allotted to the discounts. The line of credit at the bank has almost reached
During the year, the company purchased goods costing $1,500,000. If Uptown Athletic reported ending inventory of $600,000 and sales of $2,000,000, their cost of goods sold and gross profit rate would be 20) During the year, Sarah’s Pet Shop’s merchandise inventory decreased by $30,000. If the company’s cost of goods sold for the year was $450,000, purchases would have been 21) At the beginning of the year, Wildcat Athletic had an inventory of $200,000. During the year, the company purchased goods costing $700,000. If Wildcat Athletic reported ending inventory of $300,000 and sales of $1,000,000, their cost of goods sold and gross profit rate would be 22) The entry to record of sale of $900 with terms of 2/10, n/30 will include a 23) Dobler Company uses a periodic inventory system.
Margin of Safety (DOLLARS) Budgeted – break even = 100,000-62500= 37500 (Percentage) 37.500/100.000= 37.5% (Units) 37500/250= 150 3.Compute the company’s margin of safety in units assuming the proposal is accepted. Margin of Safety (Dollars) 137500-58929= 78571 (Units) 78571/275= 286 4. Compute the increase or decrease in profit assuming the proposal is accepted, show the contribution Income Statement for current and proposed. Present Proposed Sales 100,000 137500 Variable expense 64000 80000 CM 36000 57500 Fixed cost 22500 244750 Net income 13500 32750 difference: 19250 4a. What is the operating leverage for the current and proposed?
It may be an option to consider losing market share but staying with higher prices. We will start making revenue of $342 when we capture a minimal market share of 15.6% (approximately 50,500 customers) if we charge a bundle price of $84.95. The Table 3 below shows the variation