What volume is required to provide a pretax profit of $100,000? A pretax profit of $200,000? (100 X vol) – (25 X vol) – 500,000=100,000 (75 X vol) – 500,000 = 100,000 75 X vol – 600,000/75 = 8,000 Total volume = 8,000 d. Sketch out a CVP analysis graph depicting the base case situation e. Now assume that the practice contracts with one HMO, and the plan proposes a 20 percent discount from charges. Redo questions a, b, c, d, under these condition. 2.
With no subsidy, the consumer maximizes utility at point A, and with an in-kind benefit of 10 units of free public transportation, the consumer maximizes utility at point B. A cash subsidy equal to $20 would allow the consumer to reach point B as well, so the government could convert an in-kind subsidy valued at $20 to a cash subsidy of $20 and leave people equally well off. Other goods B A 10 20 30 Public Another possibility is that the utility-maximizing point for a cash subsidy differs from the utility-maximizing point for an in-kind subsidy, as illustrated in the next graph. In this case, an in-kind subsidy, costing $20, would allow the consumer to move from point A’ to point C’, while a cash subsidy of $20 would
c. What volume is required to provide a pretax profit of $100,000? A pretax profit of $200,000? d. Sketch out a CVP analysis graph depicting the base case situation. e. Now assume that the practice contracts with one HMO, and the plan proposes a 20 percent discount from charges. Redo questions a, b, c, and d under these conditions.
Specialty Toys Case Study 1. The mean is 20,000 units and there is a 95% probability that demand will be between 10, 000 and 30,000 units. This means there is a .025% chance that the demand will be outside of 10,000 and 30,000. Using the chart, we find that z=-1.96. Using the following calculation, we find: z= x- μ σ -1.96 = 10,000 – 20,000 σ σ=5102 Standard deviation σ = 5,102 μ = 20,000 mean 2.
Calculations To calculate the Iso-Contribution change in price and levels I will use the following formula and calculations. ∆Q/Q=∆P/((P-v)+∆P) ∆P/P=20%→∆P=20%*20=$4 ∆Q/Q=(-(+4))/((20-8)+(4) )=(-4)/16=-25% ∆Q/Q=-25%→∆Q=-25%*2000=-500 Changes Table Change in sales Unit variation Change in Contribution Change in FC Change in profit 0% 0 8.000 0 8.000 -5% -100 6.400 0 6.400 -10% -200 4.800 0 4.800 -15% -300 3.200 0 3.200 -20% -400 1.600 0 1.600 -25% -500 0 0 0 Graph Question 2 In this question we will add a semi fixed cost in terms of trucks. This cost is neither variable nor fixed. Hence, we will call it Semi fixed. This cost is a bit special, because it evolves stage in function of the number of unit sold.
According to the text, the exception amount for active owners is phased out as income increases: the $25,000 maximum exception amount is phased out by 50 cents for every dollar the taxpayer’s adjusted gross income (before considering the rental loss) exceeds $100,000. 120,000-100,000*.5= 10,000 phase out 25,000-10,000= 15,000 total deductible loss; Alexa can still deduct the $2,400 because her loss is less than the 15,000. New AGI 120,000-2,400= $117,600 d. Assume that Alexa’s AGI from other sources is $200,000. This consists of $150,000 salary, $10,000 of dividends, and $25,000 of
Hameed Electronics Company operates in the highly competitive electronics industry. Prices for its control switches are stable at $100 each. Engineering estimates indicate that relevant total and marginal cost relations for its switch model are: TC = $500,000 - $25Q + $0.0025Q2 MC = ∂TC/∂Q = -$25 + $0.005Q (a) Calculate the output level that will minimize TC. (b) Calculate the output level that will maximize the company's profit. What is this maximum profit?
Question 3 Which price increase is needed to offset the profit impact of the increased raw material costs (assuming that volumes are constant)? Which price decrease will result from instituting price-flex (assume a best case and a worst case)? Answer 3 The selling price would increase by offsetting the raw material cost which is given in the “Appendix A” which shows that increase in the price by 6.5% would result in the positive side and a reductioncompany from reduction in the price. Understanding all this is done with respect to the case material. The volume is a constant which is assumed at 80% in the analysis of the price.